1. Invest in tax-saving funds
Tax-saving funds in their new (as a part of Section 80C) avatar have emerged as strong contenders from the equity-oriented funds segment. Though conventionally tax-planning investments have been made in the January-March period, the market-linked nature of tax-saving funds necessitates a different approach.
Investors who can take on the risks associated with tax-saving funds must consider making investments using the systematic investment plan route at this stage. The same will ensure they can spread their investments over longer time horizons and avail benefits of rupee cost averaging. Also the 3-yr lock-in period means that investors stay invested for the long haul and become indifferent to volatility during shorter time frames.
2. Invest in large cap funds
There's a fair chance that your portfolio is burgeoned with funds investing predominantly in the mid cap segment. This could be a result of either your investments in the recently launched flexi cap/mid cap funds; alternately the diversified equity funds you were invested in could have changed tracks and become overweight in the mid cap segment. The impressive performance of this segment notwithstanding, it exposes your portfolio to a high degree of risk on account of lack of diversification.
It would be a good time to get invested in funds of the large cap variety; maybe in small amounts and in select schemes but in line with your overall risk profile. Remember mid cap stocks inherently carry more risk. Admittedly the choices (in terms of large cap funds) available to investors are limited; however it would provide investors the opportunity to diversify their portfolios and be better insulated in case of a change in trend in the markets.
3. Restructure your portfolio
The run-up in the equity markets could have led to a deviation from your ideal/planned asset allocation. For example a moderate risk-taker investor could now be holding a "higher than warranted" portion of his portfolio in equities. This would be a right time to realign the portfolio in sync with your risk-appetite. Booking a part of profits would also be a good idea if investment objectives have been achieved.
Another opportunity such a scenario throws up is to dispose off poor quality investments. Then, there could be investments in your portfolio which don't match your risk profile or have already served their purpose. Now's the time to sell them (thanks to the buoyant markets).
4. Curb your enthusiasm
All the excitement emanating from the markets notwithstanding, investors must curb their enthusiasm. They should resist the temptation to make a quick buck and continue to invest in line with their risk profile. Adhering to one's risk appetite is essential, irrespective of the market conditions.
5. Get sound advice
Getting sound investment advice is pertinent especially in times like we are in today. A good investment advisor will help you successfully ride the surge in markets and emerge winner; conversely he can also assist you achieve your objectives, should the markets correct. Rest assured, if the 'only' piece of advice your investment advisor offers you in the current scenario is to get invested in equities, and that too in a lump sum manner, he has his personal interest at heart and not yours.
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