Thursday 17 August 2017
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Where should one invest money safely when the market is volatile?

Wondering about to invest money in the volatile market conditions? It is common to see panicking investors during the times of volatility in the financial markets. This is usually the case with naïve investors who are prompted to exit the market altogether and wait for the good times to come back. However, the investors must realize the fact that market volatility is unavoidable. It is the common nature of the financial market to go up and down over the period of the short-term basis. It is quite difficult to time the market on the short-term basis. On solution could be maintaining the long-term horizon and then ignore the short-term market fluctuations.

Here are some common things to consider while investing money with top mutual funds when the markets tend to be volatile:

  • Keep Your Perspective Strong: The market downturns could be highly upsetting. However, it is important to realize that the downturns are highly normal and usually short lived. The financial markets have observed several drastic downturns in their history of operation. However, to everyone’s relief, most of such markets also observed a positive annual return most of the times. Therefore, as the volatile phase comes into the market, you should stay positive and determined about your investment perspective.
  • Be Comfortable with the Investments: If you tend to get nervous as the market goes down, then you might not be in the right investment. The time horizon, tolerance for risk, and financial goals are the key factors which help in ensuring that you have invested in a reliable and effective investment strategy. Even if the time horizon of your investment is long enough for warranting an aggressive portfolio, still you should remain comfortable with the ups and downs in the financial markets that tend to be of short intervals.

  • Do not Time the Market: If you would be attempting to move in and out of the financial markets in case of every downturn, then it could be an expensive affair. The financial experts suggest the investors remain patient with the down times and to stick to the investment portfolio even when the market it highly volatile.
  • Invest Regularly: If you maintain the habit of investing regularly on a daily, monthly, or quarterly basis, then the downturns in the market would not have much impact on the ultimate performance of your investment. Therefore, it is vital to maintain a disciplined approach while investing in any scheme. This would help you out during the volatile situations in the market.
  • Take Proper Advantage of Opportunities: There could be a few actions that can be taken when the markets tend to be down. These actions would help you in maintaining a better position over the long-term basis. For instance, if you are looking forward to sell some investment, then a downturn in the market might offer the opportunity for achieving the tax-loss harvesting. This is when you sell some investment and realize its loss. This would help you in effective tax planning.
  • Consider All-in-One Fund Approach: While dealing with the pressure of the volatile markets, you can consider the all-in-one fund or the account that is managed professionally for the achievement of long-term goals like retirement. These different set of approaches tend to offer a myriad of different services as well as different costs. It might offer professional investment management, asset allocation, and current tax management.

Rather than focusing on the volatile conditions of the market and wondering how and where you should make the investment, it would be sensible to focus on maintaining a sound investment plan with top mutual funds.