However, it is not only the market that has displayed record breaking behaviour. In parallel, market participants are also charting their own course and setting new records. The case pertains to the share of individual investors in the trading business which has increased from a mere 33 per cent in 2016 to 45 per cent in 2021. Similarly, 10.7 million new demat accounts were opened between April 2020 and January 2021. , breaking all records and surpassing the number of new accounts opened during FY20 and FY19 combined.
This makes for a classic chicken and egg puzzle. Have retail investors entered the market with the greed of sharp profits or has the equity market surged due to increased participation from retail investors?
Whichever perspective you look at it, there is no denying that the market has been bullish in the last 18 months and there has been a clear and sweeping change in the market in terms of retail participation. However, now that the market has witnessed tremendous growth, many investors are wondering how they should present themselves for the future.
Here are some points to consider if you want to make one Investment Strategy against the backdrop of the current investment scenario:
don’t wait for the right time
There is no such thing as the right time in the investment world, only the right investment. India is a long-term structural growth story that is expected to continue over the next decade. If you are already investing in the market, it is best to stay invested and reap the long-term benefits of India’s growth story. In the short term, it is very easy to get bogged down by market noise and rely on suggestions from friends ‘well’. Be prudent in your investment selection process – Assess the multiple investment avenues through which you can get exposure to equities. These may include index funds, balanced advantage funds, or sip In select large and midcap stocks.
Invest in amazing ways through SIP
Of course, when the markets are making new highs, it can be difficult to reach ‘everything’. Eventually, market volatility can reduce earned returns and lead you to make sub-optimal investment decisions. To counter this, you must participate in a staggered manner through SIPs. If you get your equity exposure through equity mutual funds, then investing through SIP in these funds is the best thing to do. If you already have SIPs installed, you should not stop them – instead you should continue the existing SIPs and start new ones or top up the existing ones. Even if you prefer to invest directly in stocks, SIP can come to your rescue. Identify quality and resilient stocks that are likely to benefit from India’s growth story and then invest a fixed amount every month in buying these stocks. This way you can do direct SIP in shares and participate at all price levels. As a result, you can take advantage of rupee cost averaging and compounding over the long term. SIP will also help you reduce the impact of emotions and behavioral biases in the investment decision making process.
Follow your asset allocation strategy
Your asset allocation strategy is the core of your portfolio. It takes into account your risk-return objectives and ensures that your portfolio is well aligned with your needs. Your asset allocation strategy will dictate how much you allocate to equities and also indicate when equity exposure is becoming too high for comfort. It is at this point that you can consider rebalancing to bring your portfolio back to its original allocation. Always remember that you should redeem or exit your equity investments only when you have achieved your specific goals; Otherwise, you need to be tight-lipped and let the investment grow.
Just as retail investors are advised to continue investing during market downturns, even in the current environment, it would be best to continue investing while sticking to your asset allocation strategy.