1. Every year will always have several unique events which will look catastrophic to you.
2. During long-term equity-oriented investment, we should even be prepared for Y-o-Y Sensex losses like 22%, 47%, 28% and 39% in FY'88, '93, '01 and '09 resp., among 12 years of losses, while still achieving 16.5% CAGR, in a span of 37 years.
3. It's always better to be a strategic investor by:-
a) focusing on building long-term wealth,
b) believing that 10 years on, events that seem catastrophic now will pale into insignificance,
c) blocking out hype and sticking to an allocation pattern, as per one's risk profile, that earns reasonable returns across market cycles,
d) continuing to invest in equity even as market falls, and keeping money aside in debt even if equity market rises,
e) having patience and faith in power of time to even out losses,
f) not using borrowed capital for investments, and
g) refraining to keep predicting how asset classes are likely to perform during turbulent times and modifying portfolio every time.
4. Mutual fund investors, who have allocated money to certain specific goals, should stick to original objectives, without getting swayed by market volatility and its cacophony, since aspirations and goal-posts remain same.
5. The key to fund investments in a volatile market is an effective risk management strategy, with focus on "purchasing power" protection, instead of "capital" protection, through a well-diversified portfolio.
2. During long-term equity-oriented investment, we should even be prepared for Y-o-Y Sensex losses like 22%, 47%, 28% and 39% in FY'88, '93, '01 and '09 resp., among 12 years of losses, while still achieving 16.5% CAGR, in a span of 37 years.
3. It's always better to be a strategic investor by:-
a) focusing on building long-term wealth,
b) believing that 10 years on, events that seem catastrophic now will pale into insignificance,
c) blocking out hype and sticking to an allocation pattern, as per one's risk profile, that earns reasonable returns across market cycles,
d) continuing to invest in equity even as market falls, and keeping money aside in debt even if equity market rises,
e) having patience and faith in power of time to even out losses,
f) not using borrowed capital for investments, and
g) refraining to keep predicting how asset classes are likely to perform during turbulent times and modifying portfolio every time.
4. Mutual fund investors, who have allocated money to certain specific goals, should stick to original objectives, without getting swayed by market volatility and its cacophony, since aspirations and goal-posts remain same.
5. The key to fund investments in a volatile market is an effective risk management strategy, with focus on "purchasing power" protection, instead of "capital" protection, through a well-diversified portfolio.