Mumbai: Should long-term investors use the extreme volatility of the stock market to place their bets? Or, they must sit this period. Investment advisers say that because market volatility and negative sentiment don't last forever, long-term players with surplus funds should invest some of their money in high-quality stocks.
Financial planners also advise their clients not to invest their excess money in stocks all at once, but spread it out over the next several months. Investors may also allocate a small chunk to gold and silver, which are expected to outperform the yellow metal this year due to an expected surge in industrial demand from electric carmakers.
"If you're looking to build wealth and invest for the long term, instead of fearing headwinds, you should buy good stocks," said Raghvendra Nath, MD, Ladderup Wealth Management. She said investing in distressed assets is better during bad times. The bad times won't last. Once the tide turns, she said, these assets typically outperform.
Problems arise when investors flock to the market with a short-term focus. They expect quick profits, and in times of market volatility, when they see losses, they prefer to get out. This increases market volatility, experts said.
"Volatility doesn't last forever. Given the current volatile situation across all asset classes, investing in stocks should be the preferred option rather than avoided," said Nath.
So what should be the approach to investing now? Financial advisers said that a good way is to put 30-40% of the common fund in stocks and the remaining 60-70% in liquid funds or bank accounts. This money can be used to buy shares in 3-6 months, which will calculate the total average purchase price of shares.
Risk-averse investors can keep some surplus to invest in bonds, gold, silver, etc According to a fixed income fund manager, since bond prices are expected to fall further over the next year, it is better to invest short term. long-term bond funds and subsequently, with lower prices, they can invest in long-term schemes.
If an investor is looking to invest in precious metals, it is better to invest more money in silver than gold, said Navnet Damani, senior vice president (commodity research) at Motilal Oswal Financial Services. She said that given geopolitical tensions, rising inflation, higher crude prices and a lack of vision on how to contain them, precious metals are expected to rise. However, Damani said, "we expect silver to outperform gold this year."
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