Balancing of investment portfolio by an individual by Dr Anindita SharmaPosts by JSB
The Economic survey of India 2018 has shown a very upbeat trend in the investment area. Now the people are not only saving their money as was the habit before demonetisation they are now investing it also. There are so many investment portfolios where people are investing like in Stocks and bonds, mutual funds, real estate, precious metals and banks.
It is advisable to have diversified investment portfolio. For a better return investment should be done in stock market or market related instruments like mutual fund. Though it gives a good return but it also entails risk. For safer investment people should go for buying real estate or for more liquidity they should go for parking their money in bank or can buy precious metals. What all is required is to have a judicious mix of all the portfolios first to have a better return and to mitigate risk of losing out the money.
Most of the people in India go for safer risk free investment i.e., in banks, that is quite understandable as at the time of need at least the principle amount is safe even if inflation is eating out the interest.
People are apprehensive about stock market and common notion is that risk of losing the money is quite high. When the market plummets one is not actually losing the money but the portfolio has just dropped in value. One loses the money when he or she sells the stock and moreover by selling the stock that person is losing the chance to recover. The key mantra for investment in the stock market is say no to panic and yes to patience.
Overall, it’s about making sure that portfolio is balanced in something other than stocks and bonds, but that’s the beauty of a balanced portfolio: when one area fails, another has your back.
About the Author
DR. ANINDITA SHARMA
Dr. Anindita is an associate professor in Jaipuria School of Business