![]() ![]() ![]() MIT Sloan Working Paper, 5822–19 (2019)īollerslev, T.: Generalized autoregressive conditional heteroskedasticity. Strategic Manag J 27(11), 1101–1122 (2006)īerg, F., Koelbel, J.F., Rigobon, R.: Aggregate Confusion: The Divergence of ESG Ratings. 65, 1–15 (2017)īarnett, M.L., Salomon, R.M.: Beyond dichotomy: the curvilinear relationship between social responsibility and financial performance. SIP also helps reduce the volatility factor, and as a result overall gain increases on your investment portfolio.Banerjee, R., Gupta, K.: The effects of environmental sustainability and R&D on corporate risk-taking: international evidence. To benefit from rupee cost averaging, you need to invest through SIP or Systematic Investment Plan mode. This way, you get a higher number of units when the market is down, and get the least number of units when the market is up. With the help of the rupee cost averaging method, the cost at which you buy units of stocks or mutual funds get an average out. Invest through the rupee-cost averaging method By having a cushion of liquid assets, you can let your higher volatility products produce the intended outcomes by being invested in them for the long-term. Accumulating high volatility products can produce poor outcomes if you need the money when that product or asset is going through a down cycle. Keep expenses for 3-12 months in liquid and accessible asset classes. ![]() Do not chase returns blindly," said Mehta. Understanding your risk tolerance and the risks in your investment portfolio could go a long way in avoiding emotional upheavals as well as help you safeguard your money during adversities. And it gets highlighted when there is a market downturn. “Often, investors take more risk than is warranted. One must determine the extent of risk one can take as per their age, income, dependents, etc. You must evaluate them on a timely basis because it helps bring your portfolio back to proper asset allocation, in turn helping minimise the risks.Įvery individual has capacity to take risk while investing in the market. Thus, it becomes important to keep a track of your investment holdings. In such a scenario, if you don’t monitor your investments from time to time, the investment risk on your portfolio can surge. However, investing in too many asset classes relative to the size of your portfolio would be over-diversification, so steer clear of that," said Mehta.Īt times, the asset allocation you did a year ago might not work as per the current market situation. Diversification mainly helps in smoothening out returns. “Diversification is about achieving a favored risk/ return objective by constructing a financial portfolio of non-correlated investments. So, if stock A price falls, your loss gets limited because 70% of your investments are in other avenues.īesides, depending on the financial goals that you set out for yourself, your investments should be diversified. For instance, suppose you invest 30% in stock A, 20% in insurance, 30% in fixed deposits and 20% in real estate. When you diversify your investment portfolio across investment product types, your risk on the overall portfolio reduces. For shorter time horizons, of 1-3 years, you should keep a debt funds heavy portfolio, and for longer time horizons, equity is a good fit," said Prateek Mehta, Co-Founder and CBO, Scripbox. Based on the risk assessment score and the time duration of goals, each investor should decide which asset class (equity, debt, etc.) they should invest in and how much. “Each investor has a diverse risk appetite and different financial goals. ![]()
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