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Simply Save | What should you do with your investments amid volatility in stock markets?

Simply Save is a weekly personal finance podcast from Moneycontrol. Here, we talk money and everything around money management, mutual funds, insurance, estate planning, how to make your next 1 crore rupees and such interesting conversations. Everything that helps you become a better saver and investor.

May 27, 2022 / 04:52 PM IST

Stock markets have remained volatile in current calendar year. Both the market benchmark indices – S&P BSE SENSEX and CNX NSE NIFTY – have corrected over seven percent each in year-to-date, with sharper correction seen over last two months.

The S&P BSE SENSEX and CNX NSE NIFTY have corrected 9 percent in just two months.

India VIX, which is a measure of market volatility, has surged more than 30 percent in year-to-date.

Several variables are influencing stock markets right now, rising inflation, rising interest rates, crude oil price rise, ongoing Russia-Ukraine crisis and lockdown in China amid resurgence of Covid-19 cases.

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Diversified equity funds have also felt the impact. For small cap funds, the category average returns in year-to-date has declined by 13 percent. For mid-cap funds it has slipped by over 11 percent and for large cap funds it is down by eight percent.

The heightened market volatility has spooked investors, especially those who are experiencing such volatility for the first time in their investment journey. In today’s episode of Simply Save Podcast, we are joined by Mahesh Mirpuri, founder of Invest Mutual, a mutual fund distributor handling assets of more than 120 families. He tells us on how investors how investors can navigate this phase of market volatility.

Some key takeaways:

  • Systematic investing in mutual funds is a great tool to take advantage of market volatility.

  • Use asset allocation for investing and then re-balance portfolio at appropriate intervals to revert to original allocation.

  • Re-balancing should be done in a systematic manner either at a fixed interval or set a trigger based on the deviation from original allocation.

  • If equity exposure has gone up to 75 percent, the excess 15 percent (assuming original allocation was 60:40 equity-debt) can be moved to debt and vice-versa.

  • If you have just started goal-based investing in equity funds, continue your systematic plans, no need to panic.

  • When doing goal-based investing in equity, as you start moving closer to your goal, slowly start moving your goal-linked investment to debt to protect against volatility.
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