1. In Equity Shares investment, a good way of minimizing losses during turbulent times is to place a stop-loss as per your comfort level, especially in case of shares that are very volatile.
2. Setting a stop-loss does not offload your shares right away, but gets sold if the price falls to below your comfort level, thereby losing less than you might have if the share crashed.
3. However, as stop-loss orders can also result in opportunity losses, stop-loss triggers should not be very close to the market price of the share, because any intra-day volatility may also trigger off its sale.
4. In Mutual Fund investments, the key during turbulent times is to remain a strategic investor, as opposed to being a tactical or event-based one.
5. This is achieved by:-
a) focusing on building long-term wealth, by believing that 10 years on, events that seem catastrophic now will pale into insignificance,
b) blocking out hype and sticking to an asset allocation, as per one's risk profile, that earns reasonable returns across market cycles,
c) continuing to invest in equity even if market falls, and keeping
money aside in debt even if it rises,
d) having patience and faith in the power of time to even out losses,
e) never using borrowed capital for investments, and
f) never predicting performance of asset classes during turbulent times and modifying the portfolio everytime.
2. Setting a stop-loss does not offload your shares right away, but gets sold if the price falls to below your comfort level, thereby losing less than you might have if the share crashed.
3. However, as stop-loss orders can also result in opportunity losses, stop-loss triggers should not be very close to the market price of the share, because any intra-day volatility may also trigger off its sale.
4. In Mutual Fund investments, the key during turbulent times is to remain a strategic investor, as opposed to being a tactical or event-based one.
5. This is achieved by:-
a) focusing on building long-term wealth, by believing that 10 years on, events that seem catastrophic now will pale into insignificance,
b) blocking out hype and sticking to an asset allocation, as per one's risk profile, that earns reasonable returns across market cycles,
c) continuing to invest in equity even if market falls, and keeping
money aside in debt even if it rises,
d) having patience and faith in the power of time to even out losses,
e) never using borrowed capital for investments, and
f) never predicting performance of asset classes during turbulent times and modifying the portfolio everytime.