The COVID-19 pandemic has just introduced a new avatar, Omicron, which has become the driving force for the third wave. The market is currently capped by uncertainty and fear of losing profits in potentially crippling events induced by the third wave. As Money Control reports, the stock market is undergoing a correction, so here are some well thought out tips to handle your equity investments.
fundamentally strong stock
According to Rahul Jain, President, Personal Wealth, Edelweiss Wealth Management, even fundamentally strong stocks tend to fall during the correction mode. However, it is recommended to stick to these high-quality stocks, as such stocks eventually bounce back and add value to your capital. Adding these high-quality stocks is a wise move as fundamentally strong equities are available at attractive valuations at such times.
Avoid convulsions and knee-jerk reactions
Patience is the key, and that’s what analysts recommend when deciding whether to stay in the game or take an exit route. The fact is that the markets hit a new high in 2021 as a result of instances of tailwinds in the economy. Panic and judgmental can cause real harm.
Diversity
A well balanced diversification in your equities is a viable net that protects and protects your profits in the event of a downturn. The potential for wealth creation can be increased by having a wise mix of large, mid and small-cap stocks. Here, a wise mix is one where diversification leans towards large-cap stocks as mid and small caps are more volatile and prone to risk.
Avoid lump sum investment
It is prudent to follow a Systematic Investment Plan (SIP) or stagger your investments, as lumpsum investments have a higher potential for loss. Apart from the loss in capital, it also affects the perception about the investment experience, leading to an unfortunate halt in your equity investments. SIP keeps you hooked to the market through various instruments, resulting in higher units even during bear markets.
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