Equity market is in the midst of a strong bull run. In which there has been a tremendous increase in the wealth of the investors. Strong corporate results, increasing vaccination momentum and strong liquidity have fueled the market.
Meanwhile, there is a debate among market experts about the fact that the market has become excessively hot. In such a situation, correction is possible in the market anytime now. Here we are giving you such mantras related to equity market, so that you can earn maximum profit while reducing your risk.
Invest with a long view
Before entering the equity market, it needs to be kept in mind that only long term investment can give us good returns. Equities are quite volatile from a short term perspective. In short term investments, the huge volatility in equities can scare you. On the other hand, when you stay in your investment for a long time, then the risk of market fluctuations is greatly reduced. Here by long term investment, we mean from an investment perspective of 8-10 years. In long term investments, you get a lot of benefit from intermittent rallies.
Don’t try to time the market
Do not try to time the market on your own for good returns in the market and it is not even possible. For good returns in the market, you have to stay for a long time. Also keep in mind that the veteran investor cannot predict when and which side the market will turn.
Keeping this in mind, choose quality stocks and stay in the market for a long time. This will also reduce the risk of market volatility and there will be a possibility of getting better returns.
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Invest in 3-Instalments
Never put your money in one spot when the market is in a bull run. Instead, invest in installments intermittently. By doing this, you will be saved from incurring huge losses in case of sudden big fall in the market or any short term correction. Along with this, it is also a good strategy to get an idea of its depth before jumping into the water. Keeping this in mind, investors are advised to invest a small amount in mutual funds through SIP. In case of any fall in SIP, you get more units and with the passage of time your average purchase price goes down. Apart from this, investing in SIP inculcates the habit of investing in a disciplined manner, which is the key to wealth creation in the long run.
Don’t put all the eggs in one basket
One of the biggest mantras for investors is never to invest all your money in one sector or equity. Allocate money in large, mid and small caps in your portfolio. It should be noted that large cap funds provide stability to your portfolio. On the other hand, mid and small caps have the potential to give higher returns. Keeping this thing in mind, invest your money in different sectors and segments. Diversification improves the risk reward ratio.
avoid sheep trick
Sheep move in equity market can be very dangerous for you. Never invest under the influence of a friend, acquaintance, or any other so-called market expert. Invest only in companies that have good fundamentals, good corporate governance, strong balance sheet and good outlook. Along with this, keep reviewing your portfolio from time to time. Weed out funds or stocks that have not performed well, whose outlook is not looking good, and include funds and stocks with better outlook and performance in the portfolio.
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