Tata Capital Blog
  • Aspiration
    • Home Loan
    • Business Loan
    • Education Loan
    • Vehicle Loan
  • Lifestyle
    • Personal Loan
    • Travel Loan
    • Wedding Loan
    • Consumer Durable Loan
    • Home Renovation Loan
  • Protection
    • Medical Loan
    • Insurance
  • Finance Essentials
    • Loan Against Property
    • Loan Against Securities
    • Wealth Management
    • Trends
    • Government Regulations
  • Moneyfy
    • Investments
  • Business
    • Equipment Financing
    • Equipment Leasing
    • Working Capital Loans
    • Term Loans
    • Construction Finance
  • COVID-19
    • CORONAVIRUS
    • GOVERNMENT UPDATES
    • WORK FROM HOME
    • LOCKDOWN SOLUTIONS
    • FINANCE SOLUTIONS

Archives

  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • July 2017
  • June 2017
  • March 2017
  • January 2017
  • November 2016

Newsletter

Enter your First Name and Email Address below to subscribe to our newsletter

Categories

  • Business Loan
  • Construction Finance
  • Consumer Durable Loan
  • CORONAVIRUS
  • Education Loan
  • Equipment Financing
  • Equipment Leasing
  • FINANCE SOLUTIONS
  • Government Regulations
  • GOVERNMENT UPDATES
  • Home Loan
  • Home Renovation Loan
  • Insurance
  • Investments
  • Loan Against Property
  • Loan Against Securities
  • LOCKDOWN SOLUTIONS
  • Medical Loan
  • Personal Loan
  • Term Loans
  • Travel Loan
  • Trends
  • Vehicle Loan
  • Wealth Management
  • Wedding Loan
  • WORK FROM HOME
  • Working Capital Loans

Meta

  • Log in
  • Entries feed
  • Comments feed
  • WordPress.org
Tata Capital Blog
  • Aspiration
    • Home Loan
    • Business Loan
    • Education Loan
    • Vehicle Loan
  • Lifestyle
    • Personal Loan
    • Travel Loan
    • Wedding Loan
    • Consumer Durable Loan
    • Home Renovation Loan
  • Protection
    • Medical Loan
    • Insurance
  • Finance Essentials
    • Loan Against Property
    • Loan Against Securities
    • Wealth Management
    • Trends
    • Government Regulations
  • Moneyfy
    • Investments
  • Business
    • Equipment Financing
    • Equipment Leasing
    • Working Capital Loans
    • Term Loans
    • Construction Finance
  • COVID-19
    • CORONAVIRUS
    • GOVERNMENT UPDATES
    • WORK FROM HOME
    • LOCKDOWN SOLUTIONS
    • FINANCE SOLUTIONS

How can a long-term investment approach help manage a crisis?

by tatacapitalblogOctober 16, 2020 in Wealth Management, no comment
Long Term Investment Approach in Crisis Management

From the year 1990 when the benchmark Sensex was trading at less than 1,000 points, to the year 2020 when Sensex crossed 40,000 mark for the first time, India has witnessed multiple economic downturns. But if these numbers tell us one thing, it is that being invested for the long-haul more than pays off.

The Indian stock market along with other global equity indices are now on a recovery path. Although the Covid-19 infections are on the rise, Dalal Street may soon be able to gain the pre-Covid levels. The 2008 financial crises had also taken the sheen off the markets but a recovery soon followed and the trust in the financial markets was restored.

Historic evidence suggests that long-term investment could be among the best means to survive a crisis. Therefore, astute investors are known for buying and holding stocks rather than trying to time their investment.

What is the buy and hold strategy?

Anxiety may lead you to buy and sell very frequently. Volatile markets are difficult to handle. Frequent buying and selling may result in wrong bets. Besides, when you over trade, your trading commission cuts into your returns.

Although buy and hold is no guarantee that you would end up with higher returns, it is more likely that you will get rewarded for taking a higher degree of risk and remaining invested in the highs and lows of the markets.

Riding the highs and lows

Another set of numbers further corroborate that long-term investment helps manage highs and lows. According to Investopedia, an analysis of  stock market returns since the 1920s shows that individuals have never lost money investing in the S&P 500 for a 20-year time period.

Needless to say markets have proven to be the first victims of crises such as the setbacks of the scale and size of the Great Depression, Black Monday, the tech bubble and the financial crises, but long-term investment have aided investors to balance such setbacks.

Retail investors are poor market timers

The last few months can accurately describe why it is a futile exercise to time markets. Most investors tend to withdraw money at the slightest hint of a loss and then end up failing to reap benefits when markets rebound.

Investors who tend to pay too much attention to the market movement tend to miss the long term benefits of staying invested in the markets. A simple long-term buy-and-hold strategy has worked more often than not.

Additional Read: Why has the number of retail investors increased during an economic crisis?

Diversification with long-term investments

Planning your investment for the long run is the key to surviving a crisis. Investing in international equity is one way of doing it as it helps in diversifying your portfolio. Such a strategy opens up opportunities to invest in companies dealing in technology & healthcare.

Investing in US equities and technology-oriented funds can help you reap benefits from depreciating rupee value.

Experts continue to advise having a long term view to effectively deal with crises. However, it is important to continue to reassess one’s risk-taking capabilities. Changing circumstances require investors to reassess their portfolio. Similar to crises seen in the last decade, markets are likely to emerge strong from COVID-19 too. Diversification and regular assessment over a long period of time will aid in going through these tough times.

Additional Read: Benefit of Asset Allocation in the Portfolio

Perks of long-term investment

In essence, a long term view helps accumulate more wealth as it mitigates the risk of high volatility. Compounded growth in mutual funds, fixed deposit or other instruments maximizes profit in the long term. Therefore, PPF and EPF have proved to be the most popular investments, especially suited for investors looking to avoid risk.

Conclusion

The ongoing financial upheaval may require you to change your investment strategy. Rebalancing your portfolio for long-term investment may now seem more reasonable than ever. With Tata Capital’s Wealth Management solutions, you receive the best portfolio guidance for the current economic climate. For those who are seeking the best suggestion to organize their finances during the ongoing pandemic, Tata Capital Wealth offers solutions that can aid you in planning your SIP mutual fund investments and other wealth creation products that help you maximize your earnings.

Share on FacebookShare on Twitter
Previous

Everything you need to know about Value Investing

October 16, 2020
Next

How Debt Mutual Funds Benefit in your Portfolio

October 16, 2020

Leave a Reply Cancel reply

Related posts

Periodic Investment Portfolio Review

Why should an investor do a periodic portfolio review?

by tatacapitalblogJanuary 12, 2021no comment
Portfolio Strategy for Long Term Investment: Concentration vs diversification

What wins in the long term: Diversification or Concentration?

by tatacapitalblogJanuary 12, 2021no comment
Understanding the Credit Quality of Debt Funds

Understanding the Credit Quality of Debt Funds

by tatacapitalblogJanuary 12, 2021no comment
Short Term Liquidity - Where does one invest for the same?

Short Term Liquidity: Where does one invest for the same?

by tatacapitalblogJanuary 12, 2021no comment

Newsletter

Enter your First Name and Email Address below to subscribe to our newsletter

Recent Posts

  • What is Ecotourism and Why is it important?
  • Ultimate Checklist for Planning a Lockdown Wedding
  • Trending Bridal Lehengas of 2021
  • Top 10 Easiest Schengen Countries to Apply for Visa
  • Top 5 Sustainable Tourism Destinations

Most Popular

  • Coronavirus: Facts vs Myths

    Coronavirus: Facts vs Myths

    March 12, 2020
  • What are the Steps Taken by the Government to Fight Coronavirus in India?

    What are the Steps Taken by the Government to Fight Coronavirus in India?

    April 3, 2020
  • How To Check If you Have Coronavirus?

    How To Check If you Have Coronavirus?

    March 13, 2020
  • Top Ten Best Bikes for Your Daily Use

    Top Ten Best Bikes for Your Daily Use

    December 18, 2019
  • Top 5 Mileage Bikes of Honda

    Top 5 Mileage Bikes of Honda

    October 17, 2019

© 2017 Rever Magazine Theme. All rights reserved.