The Beginner Investment Guide – Starting From Scratch
The Beginner Investment Guide - Starting From Scratch
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In the current era where number of investors in the equity market is growing by a boat load whether through advisor assistance or individually through investment channels, people are not largely unaware about from where to invest but the dilemma arises when the question of “How to invest” pops up.
Selecting securities which seem to be good on the outside or the ones that simply show upward trends from past few years is a basic practice. Making a portfolio while keeping in mind it’s all about structure when it comes to long term investment is the key.
In this article different tips for maintaining a well structured portfolio are given.
On the basis of Portfolio
On the basis of Return
On the basis of Nature of Investor
All asset classes are impacted by economic cycles and their performance can vary drastically at various stages of market cycles. Stocks are expected to do well during the growth and recovery phase whereas commodities might perform better during a period of inflation and interest rate hikes.
Money market securities may do well during the phase of low growth, high inflation and high interest rates. On the other hand bonds may do well when there is low growth, low inflation and interest rates are being cut.
A bull run in the equity markets starts from large cap stocks and then moves on to mid and small caps. When interest rates start declining, price appreciation in bonds begins with government securities and then moves on to corporate bonds.
Sectoral differences in performance are also seen at various points in the economic cycle. Sectors such as commodities, auto, cement, construction perform good when the economy is an upturn; defensive stocks such as FMCG, pharmaceuticals do well when the economy is in a downturn.
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Gourav Ahuja
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