Daily news updates of falling stock market might be scaring you, but here the question is should you really care about the same or is there any way to escape the volatility? The answer is quite simple for both questions, for the latter one is no, you cannot escape the market volatility but the answer to the former depends on your style of investing.
If you are a trader, caring about market volatility is your business, but if you are a long-term investor, a few aspects of the stock market and investing grounds can make you carefree of the market volatility. Here are three methods of investing that can make you stress-free from market volatility.
Long-term investing objective
Long-term investing is itself an aspect of investment that helps you set off the negative effects of volatility, you fairly surpass the time of downfall and uptrend of the market. When you invest your money in the stock market with the intention to achieve long-term objectives like buying a house 20 years from now having a future value of ₹50 lakhs, you just invest and forget about your money. You do not have to liquidate your investment any time soon. Where there is no need for liquidity, there should be no fear of volatility as well.
According to the investment objective, risk appetite, and time horizon, diversification of the portfolio has been made, even if you invest in the stock market. Don’t put all of your eggs in one basket is the old concept of investing that you all follow sincerely which helps you in maintaining an expected percentage of return on investment.
Even if your one investment failed, your other investments will give you decent returns that can replace your worst-performing investment. It will be possible only if you diversify your investment appropriately by taking considerations like growth potential, current internal management’s efficiency, industrial growth, and historical record of the industry and company.
Choice of the company
There are two types of people in the space of investing, one who does proper research before investing in terms of the company's mission and visions, corporate actions, historical records, and the government’s attitude toward the same industry in which you are investing.
Another one who just takes advice from their friends and relatives. If you are the former along with having a long-term objective from your investment with a full-fledged suitable diversification, you do not have to worry about the volatility in the stock market it is facing. The current color of your portfolio won’t be after if you are not going to sell it any time soon.
The investing method you chose to opt for majorly defines how you are going to reach the market’s ups and downs. If you are merely following random people’s advice, you need to be careful about the volatility as when a downfall happens, a few companies get affected permanently. If you haven’t done proper research about the company, it might lead you to a permanent loss of your capital.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com