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Tata Capital > Blog > Wealth Services > 5 Investment Rules that can help you sail through this year

Wealth Services

5 Investment Rules that can help you sail through this year

5 Investment Rules that can help you sail through this year

For most people, the new year is a time for new resolutions. Some choose to eat healthier, some choose to spend more time with their families, while others may resolve to cultivate a hobby. If you’ve decided to concentrate more on your personal finances this year, first off, congratulations on taking that resolution. Next, of course, you’ll need a nice set of guidelines to help you pick the right investment options for your investment portfolio, so you can make your money work for you.

In light of this, we’ve put together 5 key investment rules that can make it much easier for you to sail through this year and give your finances a facelift. So, let’s get started.

1. Rebalance your portfolio

If you already have an investment portfolio, it may be time to revisit your investment options and see if they’re optimal for your long-term and short-term goals.  You need to rebalance your portfolio every once in a while and ensure that your capital is allocated across different assets in a manner that’s most optimal for your risk profile, investment horizon and investment goals. Asset allocation helps you make the most of market movements as we move into the new year. So, revisit your investment portfolio every six months or so and ensure that your equity-debt mix is well-constituted.

Additional Read: Why should an investor do a periodic portfolio review?

2. Buy defensive assets

The market can largely be divided into cyclical and defensive sectors. The former category responds in a manner that’s directly proportional to market movements. For instance, if the economy isn’t performing up to par, cyclical sectors tend to also perform poorly. Some examples of such sectors include real estate and automobiles. On the other hand, defensive sectors remain largely unaffected by market movements. This FMCG, pharmaceuticals and healthcare and IT. One of the best investment rules you can follow this year is to increase allocation to defensive assets. These are the assets that you’ll need to make your portfolio immune to economic pitfalls.

3. Stay away from speculation

Speculation may not be a smart idea even during the best of times. And now, with the economic situation in various countries across the globe still quite uncertain, it’s all the more reason to refrain from engaging in speculative investment decisions. That way, you can ensure that you don’t risk huge portions of your capital funds. Instead, make informed investment choices and pick up the investment options that possess good fundamentals. If you’re a beginner to investments, or if you do not have significant capital to risk, it’s best to steer clear of speculative trading, so you can avoid the perils associated with this trading strategy. 

4. Keep your SIPs active

In a sharp contrast to speculative trading, SIPs can actually help you stabilize your investment portfolio and also enjoy a couple of financial advantages along the way. For starters, SIPs give you the freedom to invest small sums of money over a longer period of time, consistently. This absolves you of the burden of first putting together a lump sum of money before you begin investing. Secondly, SIPs also give you the advantage of rupee cost averaging - meaning that you can buy more units of funds when their prices are lower, and vice versa. Now, with the markets reviving, the time is right to revive your SIPs if you’d paused them last year, or to begin new SIPs if you’ve been waiting for the right time to enter the market.

Additional Read: Why are SIPs an Ideal Choice for the First-time Investor?

5. Adopt the ‘Core & Satellite Approach’

If you’re looking for investment rules to follow this year, consider the Core & Satellite approach, which is an excellent investment strategy for investing in investment options like mutual funds. It’s essentially a method of constituting your investment portfolio by splitting it into two key segments - a core and a satellite. The core typically consists of the largest investment option in your portfolio (such as index funds), while the satellite segment includes multiple smaller investments. The division of funds between the core and the satellite is not set in stone, although an 80-20 or a 70-30 split generally works well.


These investment rules can get you started on the right note with your investment strategy this year. They’re easy enough even for beginners to adopt. And if you find that you still need a bit of help with your finances, you could always approach an expert like Tata Capital Wealth and seek out professional assistance.

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