It is not easy to eliminate risk from your investment. Sometimes the market does not perform as expected and sometimes the investment does not yield the expected return. In such a situation, you can miss your financial goal. It is possible that the other products of the segment that you have selected will have better performance. In such a situation, it is necessary to know what strategy should be adopted on such investments which are underperforming. Let us understand one by one on all types of investment options, what strategy should be adopted in such a situation.
Due to the fall in FD interest rates in the last few months, the return on FD has come down. However, the risk associated with switching from FD to other options should also be kept in mind. In the present time it becomes even more important because at this time along with increasing your capital through investment, the protection of the original capital has also become important.
- If your risk appetite is very low, you can continue investing in FDs or divide your investment capital into several parts and get FDs in many banks. Apart from this, another option is that you can invest the remaining parts in small savings schemes such as liquid funds, debt funds or AAA rated corporate bonds by splitting several parts of your investment capital and FDs in different banks. On these small savings, you can get higher returns at less risk.
- If you have more risk appetite, then you can choose an option like Equity Fund SIP, a part of your investment capital.
Equity mutual funds are more volatile than debt funds. You may have some equity funds in the portfolio that are underperforming the almost similar funds available in the market. Sometimes it happens that the performance of an equity fund is weak because the performance of some stocks of that fund is weak. If you have found in your study that the stock manager has selected a weak stock, then you can switch to another equity fund. For this you can talk to a certified financial advisor so that the right equity fund can be selected.
Debt funds generally have less risk than equity funds. However, if the debt funds in your portfolio are not doing better than other similar debt funds, then analyze the portfolio of the fund to see what the purpose of its investment is and try to find out if the underperformance is temporary or even Only the performance will continue. If the fund is not performing well due to higher expense ratio, then change your investment strategy. You can sell the fund or switch to another better debt fund. However, one thing must be sure that the debt fund’s underperformance is cyclical or due to temporary economic impact.
Direct investment in equity
Direct investment in the stock market is very risky as the stock market is very volatile. It requires a lot of patience to invest and the right approach is necessary for good returns. If the stocks you have invested in are not performing well or are getting negative returns, then first analyze your portfolio. If a stock is not performing well, then compare it with its sector performance. If the sector performance is not even better, then you can continue investing. However, if the industry is underperforming, then try to find out the reason for it and if it is not expected to perform well in the future, then sell it.
If the entire portfolio is not able to perform well, then contact an investment advisor and try to find out the reason for it and if necessary, prepare a new stock portfolio again.