Q. How should I navigate this market volatility? Should I invest in companies with strong balance sheets, focus on saving cash, or review and rebalance my portfolios?
Ramesh P, Mangalore
During periods of market volatility, many investors tend to react emotionally. However, this is actually the right time to review portfolios and evaluate the quality of the stocks. If your portfolio consists of fundamentally strong companies, you should continue holding those positions and even consider accumulating more during market dips. For you have additional funds to invest, it is better to stagger the investments instead of deploying the entire amount at once. A systematic, phased approach helps ensure better rupee cost averaging.
Q. I am new to trading, and I have a high-risk appetite. Should I focus on protecting my cash or chase momentum-driven stocks?
Leela Mathew, Chennai
If you are a high-risk trader, then you should be prepared to take aggressive calls. However, maintaining adequate cash reserves is essential, as it helps capture better opportunities with lower risk during market corrections or reversals. Momentum trades can still be taken, but only when there are strong technical signals and the position size is kept limited to manage risk effectively.
Q. I am 38 years old, what should be my ideal asset allocation for a portfolio? How to maintain diversification across asset classes, what should be the percentage of equity?
Dipin Chandran, Kochi
Asset allocation plays a crucial role in portfolio construction, especially when different asset classes deliver varying returns. If you already hold gold in your portfolio, then you can continue to hold it. However, while building a new portfolio, the ideal allocation towards gold should be around 10% and a maximum of 15%. This helps maintain diversification without exposing you to excessive concentration risk. Before finalising asset allocation, you should always consider your risk appetite, investment horizon, and overall financial goals. A balanced approach ensures stability during volatility and supports long-term wealth creation.
