The stock market is currently at its all-time high zones. The investors feel left out if they don’t invest in the stock market (Fear of Missing out). But there can be a lot of risk entering the market at its peak as well. SENSEX has crossed 53,000 levels this time making a lifetime high.
The thing to keep in mind while investing in all-time high stock markets:
1. Don’t invest in a lump sum manner:
- In some years the investors get more returns than expected but this does not tell that an individual should invest all-in at that time.
- An investor should have rational expectations for returns from the Stock Market of 12%-15%.
- The investment strategy should only be in a staggered manner to keep themselves safe from market volatility.
- There are 2 ways to invest in a staggered manner: SIP (Systematic Investment Plan)- which is done for the future cash flows that will come and STP (Systematic Transfer Plan)- it is defined as investing currently in liquid securities and invest that in the next 12 to 18 months.
2. Behaviour Management before Investment Management:
- The behavioral management of an investor should be given more importance than investment management in this market situation.
- An individual should stick to its investment strategy even if the market has shown sudden volatility.
- The investor would feel FOMO if the market will go on further but it will limit the downward risk for the same.
3. Follow Asset Allocation:
- This is the most important strategy for an individual to allocate all its assets properly in different forms.
- If an individual has a large corpus, then, it is advised to diversify the portfolio into equity, debt, gold, and other investment opportunities.
- One should also keep on rebalancing the portfolio as per the demand of the market to get higher returns.
An investor should keep in mind all the 3 points to get a better sight of how to invest properly in the stock market which is at its all-time high. If these discussed points are followed, the returns are likely to rise and the risk will be reduced. Do consult your financial advisor before making any investment strategy.