Investing: Fair share

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SummaryInvesting in equities has a risk-reward association with it. Before you take the plunge, here are a few things you need to remember

risk profile, you can also take exposure in mid-cap funds and sectoral funds. Ideally, you should have a mix to diversify risks and also returns.

You should always do careful research and analysis before investing in any instrument. This holds good for investing in mutual funds as well. Check third-party websites, such as valueresearchonline.com or Morningstar.in, to compare fund rankings and performance. Although past performance does not guarantee future performance, you should check the long-term performance of the fund. Also, check other factors like the fund house background, details of fund manager, risk profile of the fund, etc.

Invest systematically: You can invest through Systematic Investment Plans (SIPs) to beat the volatility in the stock market. Although your returns may be a bit compromised when markets are rising, the SIP route can be very beneficial in falling markets or volatile situations. Invest for the long term to get the benefits of equities. Similarly, you can consider withdrawing systematically as well, using Systematic Withdrawal Plans, which can again reduce risks.

Check performance regularly: Most people invest in equities, but forget to check the performance regularly. Equities are not like fixed deposits where you can invest and forget. You need to constantly check how your investments are faring, and need to get rid of the poor performers to improve returns of the portfolio. It is not advisable to churn your portfolio too often. Nevertheless, you must proactively keep a watch, at least once in three months to cut losses, wherever possible.

Automate investments: Nowadays, with all facilities pertaining to equity investments being available online, you must take efforts to activate online transacting. You should also sign up with your fund houses or brokers to get updates on email regularly. You may have to fill in additional forms and documents. However, this can help you save a lot of time over the long term and also make investing easier.

Use the help of a financial planner: Equity investments can be simple with some research, knowledge and time. However, if you do not have the time or knowledge or if you are confused with your holdings, you can hire a professional planner or advisor who can help you in deciding your investments based on your goals.

The author is CEO, BankBazaar.com

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