admin MANAGING PORTFOLIO DURING A RECESSION PATIENCE AND A PLAN CAN HELP YOU MAKE SMART INVESTMENT DECISIONS
Recessions are most often defined by a large decline in activity spread across the economy. That includes income; employment; production; and wholesale retail sales, along with corporate profits. And all of that results in declines in the stock market, making managing your portfolio difficult.
But there are ways such as managing your risk, diversifying or rebalancing your investments, making tactical allocations, and employing rupee-cost averaging to help your nest egg weather the turbulence.
Investing during a recession might lead you to attempt to time the market when stock prices are low and falling. hoping that stocks will rebound quickly. However, the most effective way to manage your money in a recession can depend on several factors, including your risk tolerance and time horizon. We understand that this whole process can be overwhelming hence Armstrong has ways to shield your money from recession.
- INCREASE IN EXPOSURE TO DEBT FUNDS
Debt funds could be valuable to your portfolio during a recession or a volatile market situation as these assets are considered less volatile than equity. Debt Funds consistently deliver positive returns.
- SYSTEMATIC TRANSFER PLANS TO MITIGATE RISKS
STP is one of the most reliable risk-reducing strategies that investors can adopt. It is an effective strategy to rebalance portfolio across equities and debt instruments depending on the market conditions.
- STAY THE COURSE WITH SYSTEMATIC INVETMENT PLAN
Don’t stop your SIP when the market is down. A SIP is designed to help the investor benefit from market volatility. Over time, the cost average out and purchase price per unit falls. this puts the portfolio in better position to earn returns.
- LOOK INTO TACTICAL INVESTING
Tactical investing responds to market conditions, attempts to shift the composition of a portfolio to manage risk exposure. It adjusts the portfolio in light of change and when to readjust it back to the target investment mix.
- ALWAYS HOLD CASH
Market dips can also be a buying opportunity, invest when the stock market is down to reap maximum benefit.
The trick is to be ready for the fall and willing to commit some cash to snap up investments when prices are dropping.
- DON’T FEAR THE BEAR
While bear markets can be terrifying, they’re normal, inevitable and – most importantly – don’t last forever. It may last for around 8 – 15 months on average. We encourage to think like a long-term investor and hold onto your investments, remembering that this cycle will eventually pass
The current threat of a recession is an important reminder to investors that the markets are not invincible.
However, the fears brought by a potential economic slowdown serve as a good warning to investors to protect and manage their portfolios accordingly in a worst-case scenario. Recession-proofing your portfolio now through Mutual Funds will be one of the best defenses against asset losses in the future.
“A financial advisor at Armstrong Capital & Financial Services Pvt. Ltd. could help you build a recession-resistant investing plan.”
We make sure to take the long view and consistently invest in a low-cost diversified portfolio no matter what’s happening in the markets.
About the Author
Manju Mastakar
The author is Managing Director of Armstrong Capital & Financial Services Pvt. Ltd. and she has over two decades of experience in Investment planning. Armstrong Capital offers comprehensive Investment Solutions for Individuals for more details visit: www.armstrong-cap.com
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