Investing in a single financial instrument is risky, says Mukesh Kochar of AUM Capital
One should properly diversify the portfolio, but over or under-diversification will not work. Reasonable diversification is important, says Mukesh Kochar, National Head of Wealth, AUM Capital.
In an interview with MintGenie, Kochar said that investors must refrain from investing in a sole financial instrument or those of the same kind of instruments, as putting all eggs in one basket can be a risky move.
Most of the new-age investors have not seen any downfall in the equity market. Investors who have come to the market post covid have enjoyed a rally in the market with low volatility. One must be aware that the bull and bear phases are synonymous with the market, and the bull market will not last forever. So first of all, allocate only long-term funds to the equity market and maintain proper asset allocation with goal-based investments.
One should properly diversify the portfolio, but over or under-diversification will not work. Reasonable diversification is important. Invest regularly and use any deep fall in the market to invest. One should not look to make quick money as this may be risky and capital may erode. Avoiding the noise of penny stock is very important. One should look at the broader picture over the long term while investing. These are a few things one can keep in mind.
Investors generally invest more in a rising market and sell and remain sideways in a downward-trending market. Also, they start very late and expect extraordinary returns in a short period to make quick money. One should always invest more in a down market and wait patiently with regular investment to reap the benefits in a bull market. The longer the investment, the more the power of compounding works and hence higher the multiplication of
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