Summary: Making investments in stocks and mutual funds is a great way of achieving your financial goals. But how to reduce risks when you are a beginner? Find it out.
The ongoing war between Russia and Ukraine has impacted the Bombay Stock Exchange and National Stock Exchange. Such volatility of the market may cause beginners to panic and slip away from the equity markets, vowing never to come back again.
Any investment big or small is subject to market risks. The thumb rule is to protect your principal amount. While the stock market involves risks and can`t be entirely predicted or avoided, one can protect the portfolio by being mindful, careful, and observant of market changes to minimize the investment risks. There are many online business courses for entrepreneurs to offer in-depth information on financial investment.
So apart from creating a diversified portfolio with quality stocks, you may also listen to the experts like Meghana V Malkan and Vishal B Malkan from April 1st to April 3rd, 2022 to learn how to make a mindful investment.
Here are four ways that will help you to reduce the risk while investing:
1. Keep Your Portfolio Diversified
What you do to your portfolio matters and when it comes to diversifying it, it can help in more than one way. Investing in more than one asset class will minimize the risk. Diversification means to spread out investments in different types of funds across various sectors and not stick to a particular theme or an idea.
While over-diversification means low-risk and low returns, a concentrated portfolio are a high risk-high return concept advisable to only those who are experts in the field. An investor`s job is to find the middle ground between over-diversification and concentration.
2. Buy Value & Buy Cheap
Would you invest in a property which is quite expensive or would you want to invest in a real estate property that is available at a cheaper price and have the chances of gaining momentum in the future?
The best thing about value investing is that it offers maximum margin safety. But the downside is that it offers limited growth, unlike the sectors that offer unlimited growth with high uncertainties. To find themes that are available at cheaper prices and experiencing temporary downturns but are expected to do well in the future. If you are just a beginner, you can take online courses for entrepreneurs to gain basic knowledge related to stock market.
3. Invest in SIPs
Systematic Investment Planning which is also known as SIP is a great investment plan for everyone. Hence, it is advisable to maintain a disciplined approach towards mutual fund SIPs no matter where the world is going as it can help in averaging out the NAVs at various levels.
4. Avoid Adding Stocks With the help of Margins
Avoid taking leverage and adding stocks with the help of margins. Pure cash investing is a slow and steady process to win the race.
Investing in stocks can be overwhelming especially for beginners. However, with the above-mentioned strategies, you can begin on a positive note. These strategies will help you to minimize risk while investing. To ensure that you make some good investments, you can either consult a financial advisor or you can take our problem solving courses that are aimed to offer extensive knowledge.
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