Your Money: Make the most of market volatility

financialexpress.com:

By Deepak Sood

The ideal way to manage volatility is through proper diversification of portfolio followed by having some money invested in a contrarian investment strategy. Diversifying portfolios across investment strategies and asset classes, including international exposure, mitigates volatility risk.

Goal-based investing is another way to lower portfolio volatility. Investing towards specific goals like children’s education, retirement, and buying a house, helps you to time your investments, thereby selecting the right product that matches the investor’s risk appetite.

International investing also helps in reducing market volatility. According to a recent report, India contributes only 3.6% of the world market-cap. Also, sovereign, and corporate bonds across international markets provide an extra edge to your portfolio.

Asset class diversification
Amidst concerns about high market valuations, some advocate for profit booking and diversification in periods of heightened volatility. Reallocating a portion of equity holdings into the debt segment can mitigate short-term risks and provide stability.
Debt instruments offer relatively stable returns and income generation, reducing portfolio dependence on volatile equity markets. However, investors must balance risk management with growth objectives and seek professional guidance to align with their financial goals and risk tolerance. Ultimately, strategic portfolio adjustments amidst volatility present opportunities for long-term financial success.

Embrace a contrarian mindset
Contrarian investors thrive on market irrationality, capitalising on opportunities when market sentiment diverges from fundamental realities. They maintain a rational approach, buying when others are