So, in case, it’s become difficult for a retail investor to invest and manage many stocks, it’s better to invest in a equity-oriented mutual fund (MF) with a well diversified portfolio to withstand market volatility. However it is important for any investor to buy shares to the extent they can closely monitor,” said Ravi. Even fund managers of mutual funds follow the principal in order to overcome concentration risks. A diversified portfolio is the best method of investment. Liquidity is another considering a basket of shares as liquidity in some investments may be an issue. “A portfolio of stocks is always a more prudent way of investing. So, higher diversification would ensure higher portfolio stability. Investors generally buy shares which have a good track record for paying dividends,” said Ravi. Some company stocks tend to be volatile and some consistent. “From a investors perspective it is essential to mitigate the risk by investing in many stocks. However, a well diversified investment portfolio may absorb some volatility, as stocks of large-cap, mid-cap and small-cap companies may fluctuate differently. Future prospects and sectoral outlook individual stocks react to market and Sensex differently,” said S Ravi, Former Chairman of BSE and Founder & Managing Partner of Ravi Rajan & Co. Stocks perform on the basis of companies performance.
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Big Deals Led to Big Fees: Five of the Top Ten IPOs reported estimated legal fees that. “Risk diversification is the best way of migrating risks associated with market vagaries. Eighty-six law firms acted as either IPO issuers counsel or IPO. Higher the market volatility, higher will be the fluctuations in stock prices and higher will be risk and opportunity to earn return. So, despite stable performance of the companies in which investments are made, the market value of the shares would fluctuate along with the fluctuation in equity markets.Īlthough the stock markets provide liquidity, allowing the investors to buy and sell stocks freely during market hours, the market volatility affects the value of the stocks, especially in the short run.ĭiversify your portfolio with cryptocurrency: 5 platforms to look out for Crypto trading
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However, investing in different good companies in a diversified way doesn’t make the investments in stocks stable, as apart from default risk, equity investments are also subject to market risks.
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To minimise the risk, investors need to invest in different companies, so that even if one or two companies close down, money invested in other companies would continue to give returns.