The COVID-19 pandemic just rolled out a new avatar, the Omicron, that has become the driving force for the third wave. The market is currently shadowed by uncertainty and fear of losing the gains in the possibly crippling events induced by the third wave. Here are some thought-through tips to handle your equity investment as the share market goes through a correction phase, reports Money Control.
Fundamentally Strong Stocks
According to Rahul Jain, president, personal wealth, Edelweiss Wealth Management, even the fundamentally strong stocks take a beating during the correction mode. However, sticking to these high-quality stocks is recommended since despite taking a beating, such stocks eventually bounce back and add value to your capital. Adding these high-quality stocks is an intelligent move since such fundamentally strong equities are available at attractive valuations during such times.
Avoid Impulsivity and Knee-jerk Reactions
Patience is the key, and it is what analysts recommend while making decisions regarding sticking in the game or taking an exit route. The fact that instances of tailwinds in the economy resulted in markets propelling to a new high in 2021. Panicking and making decisions might convert the notional losses into actual ones.
A well-balanced diversification across your equities is a viable net that saves and preserves your gains in the event of a downturn. One can boost the potential for wealth creation by keeping an intelligent mix of large, mid, and small-cap stocks. Here, an intelligent mix is the one where the diversification tilts towards large-cap stocks as mid and small caps are more volatile and prone to risk.
Avoid Lump Sum Investment
Following a Systematic Investment Plan (SIP) or staggering your investments is prudent, since lump-sum investments are more prone to losses. Apart from losses in capital, it also leads to stunted perception about investing experience, leading to an unfortunate halt in your equity investment. SIPs keep you engaged in the market through various instruments, which results in garnering more units, even during a bear market.
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