{"id":12058,"date":"2020-10-16T09:11:57","date_gmt":"2020-10-16T09:11:57","guid":{"rendered":"\/blog\/?p=12058"},"modified":"2020-10-16T09:12:32","modified_gmt":"2020-10-16T09:12:32","slug":"how-can-a-long-term-investment-approach-help-manage-a-crisis","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/blog\/wealth-services\/how-can-a-long-term-investment-approach-help-manage-a-crisis\/","title":{"rendered":"How can a long-term investment approach help manage a crisis?"},"content":{"rendered":"\n

From the year 1990 when the benchmark Sensex was trading at less\nthan 1,000 points, to the year 2020 when Sensex crossed 40,000 mark for the\nfirst time, India has witnessed multiple economic downturns. But if these\nnumbers tell us one thing, it is that being invested for the long-haul more\nthan pays off. <\/p>\n\n\n\n

The Indian stock market along with other global equity indices\nare now on a recovery path. Although the Covid-19 infections are on the rise,\nDalal Street may soon be able to gain the pre-Covid levels. The 2008 financial\ncrises had also taken the sheen off the markets but a recovery soon followed\nand the trust in the financial markets was restored. <\/p>\n\n\n\n

Historic evidence suggests that long-term investment could be\namong the best means to survive a crisis. Therefore, astute investors are known\nfor buying and holding stocks rather than trying to time their investment. <\/p>\n\n\n\n

What is the buy and hold strategy?<\/strong><\/h2>\n\n\n\n

Anxiety may lead you to buy and sell very frequently. Volatile\nmarkets are difficult to handle. Frequent buying and selling may result in\nwrong bets. Besides, when you over trade, your trading commission cuts into\nyour returns. <\/p>\n\n\n\n

Although buy and hold is no guarantee that you would end up with\nhigher returns, it is more likely that you will get rewarded for taking a\nhigher degree of risk and remaining invested in the highs and lows of the\nmarkets. <\/p>\n\n\n\n

Riding the highs and lows<\/strong><\/h2>\n\n\n\n

Another set of numbers further corroborate that long-term\ninvestment helps manage highs and lows. According to Investopedia, an analysis\nof  stock market returns since the 1920s\nshows that individuals have never lost money investing in the S&P 500 for a\n20-year time period. <\/p>\n\n\n\n

Needless to say markets have proven to be the first victims of\ncrises such as the setbacks of the scale and size of the Great Depression,\nBlack Monday, the tech bubble and the financial crises, but long-term\ninvestment have aided investors to balance such setbacks.<\/p>\n\n\n\n

Retail investors are poor market timers<\/strong><\/h2>\n\n\n\n

The last few months can accurately describe why it is a futile\nexercise to time markets. Most investors tend to withdraw money at the\nslightest hint of a loss and then end up failing to reap benefits when markets\nrebound. <\/p>\n\n\n\n

Investors who tend to pay too much attention to the market\nmovement tend to miss the long term benefits of staying invested in the\nmarkets. A simple long-term buy-and-hold strategy has worked more often than\nnot.<\/p>\n\n\n\n

Additional Read: <\/strong>Why has the number of retail\ninvestors increased during an economic crisis?<\/a><\/p>\n\n\n\n

Diversification with long-term investments<\/strong><\/h2>\n\n\n\n

Planning your investment for the long run is the key to surviving\na crisis. Investing in international equity is one way of doing it as it helps\nin diversifying your portfolio. Such a strategy opens up opportunities to\ninvest in companies dealing in technology & healthcare.<\/p>\n\n\n\n

Investing in US equities and technology-oriented funds can help\nyou reap benefits from depreciating rupee value. <\/p>\n\n\n\n

Experts continue to advise having a long term view to effectively\ndeal with crises. However, it is important to continue to reassess one\u2019s\nrisk-taking capabilities. Changing circumstances require investors to reassess\ntheir portfolio. Similar to crises seen in the last decade, markets are likely\nto emerge strong from COVID-19 too. Diversification and regular assessment over\na long period of time will aid in going through these tough times. <\/p>\n\n\n\n

Additional Read: <\/strong>Benefit of Asset Allocation in\nthe Portfolio<\/a><\/p>\n\n\n\n

Perks of long-term investment<\/strong><\/h2>\n\n\n\n

In essence, a long term view helps accumulate more wealth as it\nmitigates the risk of high volatility. Compounded growth in mutual funds, fixed\ndeposit or other instruments maximizes profit in the long term. Therefore, PPF\nand EPF have proved to be the most popular investments, especially suited for\ninvestors looking to avoid risk. <\/p>\n\n\n\n

Conclusion<\/strong><\/h2>\n\n\n\n

The ongoing financial upheaval may require you to change your investment strategy. Rebalancing your portfolio for long-term investment may now seem more reasonable than ever. With Tata Capital\u2019s Wealth Management solutions<\/a>, you receive the best portfolio guidance for the current economic climate. For those who are seeking the best suggestion to organize their finances during the ongoing pandemic, Tata Capital Wealth offers solutions that can aid you in planning your SIP mutual fund investments and other wealth creation products that help you maximize your earnings. <\/p>\n","protected":false},"excerpt":{"rendered":"

From the year 1990 when the benchmark Sensex was trading at less than 1,000 points, to the year 2020 when Sensex crossed 40,000 mark for the first time. <\/p>\n

Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":12060,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[37],"tags":[],"class_list":["post-12058","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth-services"],"yoast_head":"\nHow can a Long Term Investment Approach help in Crisis Management - Tata Capital Blog<\/title>\n<meta name=\"description\" content=\"Crisis Management: Here are some Investment strategies to follow during a crisis. 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