Today, in the current uncertain times of a financial downturn and limited job opportunities, the value of a good investment remains critical. It helps you mitigate the challenges life may throw at you. Generally, a good investment has an excellent returns-risk ratio, offers liquidity, and long-term viability, among others.
When you create an investment portfolio, you must be careful to keep the risk minimal. In any market-linked investment scheme, losses due to volatility are typical. However, in the case of a strong portfolio, featuring ULIP Plan and assured savings plan the chances of losses are small, and the investments will hold their value in the long run. So, what should you do to beat market volatility in 2023?
In this blog, we discuss a few tips to help you beat market volatility.
Diversify your portfolio
You may have heard of the phrase, ‘don’t put all your eggs in one basket.’ Well, this holds perfectly true for your investments. You must avoid investing all your meaning in the same or similar types of schemes. Instead, it is advisable to spread your investments across asset classes like stocks, bonds, and debt and equity funds. This will help you reduce your risk, beat the market volatility and get valuable returns in the long run.
For example, you can invest in fixed-return bonds. It is an excellent investment option if you seek more stability in your portfolio without missing out on the potential gains due to the stock market movements. It helps you get returns even in the face of continued volatility and mitigate market risk.
Rebalance your portfolio
Too much of anything can be damaging. This holds true for your investments. So, as a prudent investor, you must regularly review your portfolio and check if you have invested heavily in one kind of investment. For example, if you have invested a significant amount in equity-related instruments, you may be in trouble if the market dips. Similarly, investing excessively in bonds may help you get stable returns, but it may not be enough to beat inflation or to accomplish your goals.
This explains the importance of portfolio review and rebalancing. If the market goes down, you can divert your funds from equities to debt funds. If you have some cash in hand, instead of keeping it idle at home, you can invest in gold funds to hedge against the unexpected market downturn.
Also, rebalancing your portfolio periodically helps you stay disciplined with your investments and focus on the long-term goals rather than feeling hassled when the market is volatile.
Invest in ULIP
Unit Linked Investment Plan or ULIP is a unique financial instrument that offers dual benefits of insurance protection and wealth creation. Primarily a life insurance policy, the ULIP plan allows you to protect your family’s financial future while building wealth for your future goals.
Most insurance companies that offer ULIP allow you to invest in different assets to suit your risk-taking capacity and goals. Also, you get the flexibility to switch your investments from one fund to another to leverage the market movements and beat the market volatility.
If you are a first-time investor in ULIP, you can use the ULIP calculator to compute the premium payable for the plan you buy. It also allows you to calculate the approximate returns from your investments.
So, choosing the suitable investment option, diversifying your portfolio and rebalancing your portfolio periodically hold the key to beating market volatility in 2023.