Rocking The Boat Never Helps

Rocking The Boat Never Helps

Hemant Rustagi
Chief Executive Officer, Wiseinvest Pvt Ltd.


Investing money judiciously is the key to achieving your investment goals. It is equally important to imbibe certain traits that can, not only help you in starting the process right but also in ensuring that it remains on track through your defined time horizon. However, despite investing money judiciously, you may still have to face a number of challenges during your defined time horizon. The level of investment success that you may achieve over time will depend upon how you manage to either avoid these surprises or tackle them judiciously. Here’s what you need to do:

Create a Roadmap
You must create a roadmap at the start of your investment process. It is quite common to see investors investing randomly in different asset classes and exiting from them depending on how these asset classes behave at certain points. Remember, a haphazard approach like this can not only make you miss out on opportunities in the market but also expose you to unwarranted risks. Therefore, it is always advisable to look at the bigger picture and establish your goals to be achieved over short, medium and long-term horizons. A goal-based investment process will encourage you to follow budgeting, give risk management it’s due and follow an asset allocation model.

Stay Committed to Time Horizon
Once it is ascertained how much time you have to achieve each of your goals, you must remain committed to it. This will help you in keeping focus on your goals without worrying too much about the impact of intermittent volatility on the portfolio in the short term. Besides, if you continue your investment process without interruption during market uncertainties, you benefit from averaging.

Keep Learning

Today, a lot of information is available on various investment options and strategies to invest in them through different mediums. However, the key is to make efforts to absorb this Hemant Rustagi Chief Executive Officer, Wiseinvest Pvt Ltd. Rocking The Boat Never Helps knowledge and use it in your investment process. If you find it overwhelming to analyse this information, take the help of an advisor. Once you start working with an advisor, listen to him or her carefully as that can go a long way in allowing you to tackle the complexities of the investment world. The unwillingness to listen and allowing behavioural biases to impact your investment decisions can make it difficult for you to adapt to the ever-changing investment and economic environment.

Be Open to Realignment
Your investment process, as well as options, must provide the flexibility required to realign the portfolio in line with your changing circumstances as well as economic and political environment. Besides, you may have to contend with volatility and non-performance of some of the investments in your portfolio. Therefore, investing in mutual funds can be a much better option than investing in traditional options that do not allow you to the required flexibility. However, don’t get tempted to make frequent changes just because you have the flexibility to do so. Another important aspect is resisting the temptation of discussing your portfolio with all and sundry as conflicting views on your portfolio composition can make you lose your focus and compel you to make investment decisions that may compromise your financial future.

Avoid Emotional Investing
You must avoid getting emotionally attached to your investments as that would make it difficult for you to make changes, when required. While tracking the portfolio plays a significant role in keeping investments on track to achieve your investment goals, it is equally important to be open to make changes in the portfolio in case some of the investments underperform their peer group and benchmarks for prolonged periods. However, it should be done only after giving sufficient time to fund managers to perform and prove their worth over different market cycles.

 

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