One of the most common types of feedback that we get from our leaders is that they want to invest in the stock markets what are afraid to do so due to the high risk involved. Today we will try to adjust this concern in this article. If you too have not invested in the stock markets due to this reason, then read on.

 What is an Equity Market?

The equity markets are simply online exchanges where millions of investors buy and sell shares of publicly traded companies every day. When you buy the shares of a company, you become a part owner of that company. If the company performs well in a particular year and earns profits, then you will be entitled to receive a part of those profits. The share prices will also increase as many people will be interested in buying the shares.

However, if the company does not do well in a year, then you will not get a share of any profit and its share price will also fall.

 The risks in Investing

Hence, investing in shares does not guarantee you any returns. Whether or not you will earn a profit will depend on lot of factors including the performance of the company, Performance of the economy as a whole and so on.

This is where the risk of investing in equity lies. At times, the share market can turn really volatile which can make difficult for many investors to manage their risk. When the stock markets do well you can earn huge profits. Unfortunately, when things go wrong then you can earn substantial losses as well. We have written several other articles on why people lose money. Give them a read.

As an investor it will be important for you to understand these risks and protect yourself from them.

Importance of Protection against Losses

When you start investing on trading in the markets you need to understand concepts like stop loss orders, portfolio diversification and periodic review and rebalancing of your portfolio. These measures will give you some level of safety from incurring huge losses.

• Stop loss orders: These our specific time automatically squares of your position if your loss which is a certain level. These will be particularly useful for you if you are trading and do not want your capital to get eroded if the market goes against you.
• Portfolio Diversification: If you’re an investor then make sure that you put your money in various assets like equity, debt, gold etc. This will ensure that even if one of these assets go down the others will earn profits. Even if you are investing only in equities make sure that you buy shares of different companies so that all your investment is not lost one company performance poorly.
• Have a long-term investment horizon: Patience is one of the most important factors that will enable you to gain good returns from the stock markets. You cannot become a king overnight. Hence, after investing in stocks the patient. Hold on to them for several years in order TLC substantial reasons. If you are impatient and he finance selling stocks frequently, you will incur excessive costs and your portfolio will also suffer losses.
• Review and rebalance your portfolio: After building a portfolio, you must periodically view their performance to understand which stocks are doing well and which are the ones you need to change. Hold on to your winning stocks and sell the underperformers in order to get superlative returns from your portfolio.

We have covered some of these measures in detail in this article. Read it carefully, understand and implement the methods while investing.

Get Professional Advice

Investing and trading are both not very easy and you must never start without getting proper knowledge and understanding of how the markets work. Getting into the share markets without preparing yourself properly is like venturing into the forest at night without having a lamp in your hand. You will certainly get lost along the way and face a lot of problems and losses as well.

All the methods that we have mentioned above like stop loss, diversification, etc., are extremely important when you are trying to invest or trade on your own. However, the better way of doing it will be to take advice from a financial advisor or a team of financial advisors who have years of experience in helping people like you to succeed in the markets.

They will understand you properly, help you to understand the risks involved and help you to make informed decisions. Working with a financial advisor like us will help you to avoid many common mistakes that many new and even experienced to investors commit.

We will understand your risk profile and then suggest you the best strategy that will give you the right confidence and help you get the returns that you expect.

Index long term strategy

We have developed a proprietary investment methos called Index Long Term Strategy (ILTS) that will help you to get the best out of the stock markets while protecting the downside of your portfolio even in falling markets.

ILTS is a long-term investment plan that is linked to the performance of turn nifty 50 index. If Nifty 50 rises, then the value of your portfolio will also rise. However, we will protect the downside of the portfolio using long term put options. So when Nifty 50 will fall the value of these put options will increase, thereby offsetting the losses of the portfolio.

In this way your portfolio will be insured against possible losses at any point of time.

The ILTS is completely flexible, and you can choose a maturity. According to the financial goals that you are having. You can also systematically withdraw a fixed sum of money at periodic intervals.

Get in touch with us to know more about the ILTS plan.

So, these were some of the ways in which you can protect the downside of your portfolio to ensure that your stock portfolio grows steadily over a period of time. Always remember that investing in equities is certainly risky but with the right approach you can easily achieve your financial goals and secure your financial future.

Happy Investing!

This article is for education purpose only. Kindly consult with your financial advisor before doing any kind of investment.