Kalpesh Ashar, CFP-RIA at Full Circle Financial Planners and Advisors, highlights the importance of adopting a goal-based strategy.
“Goal based strategy, while creating a portfolio, will always stand you in good stead. And what I mean by building up a goal-based strategy and a portfolio which is in sync with it is nothing but aligning your mutual fund schemes which are in sync with your financial goals.”
For short-term financial objectives, he suggests selecting debt funds, which offer lower risk and steady returns. Medium-term goals, on the other hand, can benefit from a combination of debt funds, hybrid funds, and multi-asset allocation funds to strike a balance between risk and return.
For long-term objectives, beyond five years, the majority of investments should be directed towards equity and hybrid funds to capitalise on growth potential.
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Ashar also emphasises the suitability of systematic investment plans (SIPs) for investors, as they enable participation in the market in a staggered manner, mitigating the impact of market fluctuations.
For those observing market corrections, lump sum investments coupled with systematic transfer plans (STPs) can be an effective strategy to optimise returns.
Jimeet Modi, Founder and CEO of SAMCO Group, advocates a shift in portfolio composition to adapt to current market conditions. He recommends moving away from mid-cap and small-cap heavy investments to large-cap focused funds for greater stability.
“In times of volatility, after a great rise in rally, it makes sense to move and reallocate, rebalance part of your assets from risky assets, as I said, from mid and small to large caps, or if you are in only equity-oriented assets, move part of your assets to hybrid-oriented assets.”
To prepare for potential market stagnation or downturns, Modi advises against aggressive strategies. Instead, investors should opt for diversified funds spanning various market caps rather than concentrating on narrow sector-focused funds.
He also underscores the importance of aligning fund selection with one’s overall investment strategy to ensure consistency and coherence.
Modi cautions against lump sum investments when markets are at all-time highs, as this may lead to performance chasing. A disciplined approach, driven by careful selection and strategy alignment, can help investors navigate uncertain market environments effectively.
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