Stagger your investments
The hard truth is that nobody can predict what the stock market is going to do next. It goes up, it goes down and trying to time it perfectly is basically a guessing game.
That’s why one of the smartest things you can do is not invest all your money in one go. Instead, spread it out over time. This way, you reduce the risk and give your money a better chance to grow steadily.
There are two routes to consider:
Systematic Transfer Plan (STP)
STP is like easing into the market instead of diving headfirst. Here, you can invest a lump sum amount in one mutual fund and then transfer to other mutual funds, (either within the same fund house or in other fund houses) depending on your needs and risk profile.
For e.g., you start by investing a lump sum in a low-risk mutual fund (like a Liquid Fund) and then transfer a fixed amount every month into a higher-risk fund (like an equity fund).
You can also use STP in reverse. If you arenearing retirement or a financial goal, you can gradually move money from equities to safer options like debt funds. This way, you protect your gains without pulling everything out at once.
Systematic Investment Plan
SIP is like a subscription for investing. You pick up a mutual fund, set a monthly amount, and it automatically debits money from your bank account and invests the money . It is not recommended to stop your active SIP during volatile periods.
Also Read: [Which investment strategy should you follow for your equity investments?]
Why investing bit by bit works?
When you invest a fixed amount every month (like through SIP or STP), you are not trying to guess the “perfect” time to buy. Instead, you are buying more when prices are low and less when they are high. Over time, this helps balance out the cost and smooths the ride, kind of like averaging your expenses over the year.
And the best part? It’s automatic. You don’t have to constantly check the market or stress about timing your moves. You just set it up and let it do its thing.
Also, do not put all your eggs in one basket. Make sure your money is spread across different types of investments, some safe, some growth-focused based on how long you want to invest and how much risk you want to take. This mix helps protect you if the market suddenly flips.
To select a suitable mutual fund scheme within each of these categories, click here.
Review and rebalance your investments:
Asset allocation is the core of investing. Just because the stock market is booming does not mean you should go all in. And if it suddenly dips? There is no need to panic and pull everything out.
Here is the deal: Your money needs regular check-ins, just like your fitness or skincare routine. Markets change, your goals evolve, and your risk comfort might shift too. It is important to review your investments every now and then and make small adjustments to keep things balanced.
If the market starts getting super unpredictable, and you are not prepared, your investments could take a hit. That is why putting all your money into just one type of investment is not the smartest move.
Instead, spread your money across different types of assets. Think of it like building a playlist: you want a mix of genres, so you are not stuck if one vibe suddenly does not work.
