These 5 steps immensely help in defining and controlling downside risk that an investor can take:-
1. Segregating goals / needs by fixing time horizons for achieving each of them.
2. Assigning a specific investment category to each goal / need, as per its documented risk, return and liquidity.
3. Selecting products in each category after evaluating their strengths, unique features and associated costs, and investing in them systematically.
4. Deciding one's debt-equity ratio for asset allocation as per one's age, income pattern and savings, dependents, liabilties and industry of employment.
5. Reviewing portfolio performance, and shifting to less risky / fixed income products on nearing a goal.
1. Segregating goals / needs by fixing time horizons for achieving each of them.
2. Assigning a specific investment category to each goal / need, as per its documented risk, return and liquidity.
3. Selecting products in each category after evaluating their strengths, unique features and associated costs, and investing in them systematically.
4. Deciding one's debt-equity ratio for asset allocation as per one's age, income pattern and savings, dependents, liabilties and industry of employment.
5. Reviewing portfolio performance, and shifting to less risky / fixed income products on nearing a goal.