Every election in India brings about some volatility in stock markets. We have experienced this in past 5-6 elections. During the period of elections, the market swings up and down wildly. During this volatility, there are chances that the value of existing investments go down or go suddenly up or it can move both ways.
This causes a lot of anxiety among investors. During this period investors are always in a dilemma whether to continue being invested in markets or to move the investments temporarily in liquid funds (liquid funds has no effect of share market).
1. How long from here you don’t need amount out of your Investments?
In case you don’t need money from your investments for a period of more than 5 years from this point then you should continue with whatever you are currently holding. In case you need a partial amount in the next 2-3 years then you should think of parking some amount out of your investments in relatively saver funds.
2. Decide on the basis of your existing asset allocation-
In case you have a very conservative asset allocation pattern in the sense you have a very little exposure to equities and you may not need your money for next 3 years then you should continue to hold existing Investments. In case you need your money in the next one or one and a half year then you should consider shifting all the amount to debt funds.
3. Decide on the basis of your risk appetite–
In case you are aggressively invested and your risk profile has changed in the recent past due to change in your current age then you should think of revisiting your asset allocation. You may want to move some amount in a relatively safer fund.
4. It’s a good idea to continue with whatever you are holding-
Sometimes investors tend to time the markets. Investors feel that they can take the benefit of dips in market during election volatility. Believe me, it is very difficult to time the market. It may not be a great idea to try and push your money during the dips in the market as you may not be able to capture the perfect ones. there is always a high possibility that you will miss both the tips and tops. show a better idea is to continue with whatever you are holding.
5. Do not track your investments often- especially during volatility investor have a tendency to track their investments closely. If they find that their value has eroded or there are negative returns the investors get panic and in such scenario, they are likely to take wrong decisions. Better not to track the Investments closely. It would be a great idea to skip watching your investment portfolio during the period of elections.
6. Judge your requirement of emergency funds– in case you feel you do not have emergency funds set aside currently then you may want to shift amount required for contingency from equity portfolio to debt portfolio.
7. Discuss with your investment advisor–
Every investor his emotional about his own money and hence the Investments. Leaving aside the expertise your investment advisor has, he can look at your Investments from neutral perspective. That is why he is in a better position to take right decision about your investment portfolio.