A high market, although great news makes many investors nervous. It is understandably so since there is always the chance of the market slowing down at some point. Most of us have been taught and advised to invest during weak markets that we are unaware of how to handle the high market. Sometime or the other, the market will go up and during that time it is always good to know whether you decide to risk your money for better returns or stay put with your current plan.
How do you decide to invest during a high market?
A market is a volatile place. If you can invest wisely, it can bring you enormous wealth at the price of risking your money. So how do you choose between staying put and risking your investment in a strong market for better returns? To choose, you should ask yourself:
- Which kind of investor are you? If you’re an investor that can plan and stay consistent for a long-term, then
- Are you sure about the fundamental consistency of your plan? That is, whether your business will resume, bloom, and keep innovating?
If answers to both questions are yes, then it can be optimistically said that you should not consider taking a chance to invest during a high market. Ignore the fluctuations in the market and continue your investment plan as nothing has changed. However, you should keep in mind to use a Calculator before you invest. Tata Capital’s Moneyfy is a digital platform where you can calculate your investments and make more informed decisions.
Additional Read: Investment Strategy during Market Highs
How to invest during a high market?
Investing during a high market does work, and the reason for it is because sometimes the market keeps going to new highs. So how do you take the opportunity and invest while the market is soaring? These are the following things that you need to go through before you invest while the market is high:
• Review your entire portfolio –
The portfolio that you created initially was made at a time when the market was different from the present. There is a possibility that valuations have changed. There might be changes in the ranks of market leaders. The reason you previously bought a few stocks might not still hold. During such cases, by holding on to them you might only face losses. Utilize your time to go through your portfolio and remove any unnecessary investments.
• Re-balance your portfolio –
The fluctuations in the market can affect the asset allocation in your portfolio. The equity to debt ratio keeps changing with the volatility of the market. It might allow investing during a high market, however, if it does not line in with your risk preference then you might be in trouble. It is crucial to rebalance your portfolio if you do not carry around a risky portfolio.
• Diversify your portfolio –
While reviewing your portfolio, you might find that your investments are not diversified. A portfolio that is concentrated increases the possibility of a loss of money. Investing during a high market for better returns requires you to diversify your portfolio. You can always invest in large caps during a soaring market, as they are prone to be secure in case of volatility.
• Establish a SIP in the mutual funds –
If you’re trading for the very first time in the stock market, you might find it to be tricky. Then you can choose to invest in equity mutual funds. With competent fund management and high diversification, equity mutual funds can give you a similar investment experience. In such a case, you can choose to start a SIP (Systematic Investment Plan) in the equity funds. With SIP, you will place consistently smaller bets.
• Invest in what you understand –
Investing in a complicated financial product can land you in multitudes of trouble. During a high market, several fund houses launch sophisticated offerings that promise you enormous returns. But you should not be enticed by such non-transparent product offerings. Even if you consider taking the risk, don’t invest a lump sum in one fund or stock.
Additional Read: Safe investments to ride out market volatility
Systematic investments help further in managing the fund for the long run by keeping a track of them. Markets will keep facing highs and lows, however, long-term investors shouldn’t be swayed by it. More importantly, even for investing during a high market, you should not lose sight of your goal. Tata Capital’s Moneyfy App offers you features like Compare Funds, Mutual Fund Scanner, Goal-Based Investing, Invest by Themes, and much more to make investing a hassle-free and convenient process.