Behavioural Aspect of Investing
The way we take care of our body to remain fit and fine in the same way we need to do regular investing to grow our wealth and secure our future from uncertainties which in turn will make our life after retirement comfortable.There are certain basic points which every investor should get to know and follow before starting their investment. These are:
1. Asset allocation & Rebalancing of Portfolio-
We should make our portfolio with healthy asset allocation and rebalance it time to time at proper interval as per our investment goals and change in market scenarios.
2. Withdraw investments at once-
Do not completely withdraw your entire invested amount in one go only on looking at the valuations. Doing so may lead to loss of compounding benefit which you could have reaped on staying invested.
3. Incurring debt to continue investments-
While it is not advisable to completely stop investing in these times. It is also not beneficial if you have to incur debt to keep your investments going. Do not borrow money to invest money in the markets when they are falling. And in case you are facing a financial distress, the best would be to halt your investments for a while.
4. Wrong to Rule out the possibility of falling markets-
It is said that you cannot time the markets. This holds true especially in a highly volatile situation as we are seeing now. Markets too are extremely volatile and in such cases, there cannot be a prediction as to which level of the markets can be said to be its bottom. Hence, it would be inaccurate to assume that markets have reached a bottom and cannot fall any further. The effect of virus is still rampant and there is always a risk of markets falling further.
As a final point, I would like to say -
Investment is nothing but a mere piece of judgement and knowledge.
Which if you don’t have will put your earnings into garbage.
Keep Learning and growing your wealth!