Page 30 - Banking Finance May 2025

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than -20% in any particular year, in 9 out of 36 years, you lower. In fact, this is very advantage that investors should
would have earned a positive return. not miss out on. Investing when Net Asset Values (NAVs) are
trending lower helps investors accumulate more units and
If we trace the history, The Nifty Midcap 100 Index of 21 benefit over the long run.
years, the index has delivered positive returns for 15 years,
despite intra-year declines often exceeding 10%. For ex- Any decision to redeem or stop SIPs should be taken in con-
ample, in 2009, the index surged by 102% after a 24% draw- text of your goals. If your goal is near completion, it makes
down, showcasing the potential for recovery and growth. sense to rejig your asset allocation.

Intra Year Declines Number of Calendar Years While market falls can be unnerving, investors should view
with Positive Returns intra-year declines as opportunities rather than setbacks.
0 to < -10% 1 out of 15 Historical data indicates that the Indian stock market has
consistently rewarded those who stay invested through
-10% to < -20% 8 out of 15
cycles. This reinforces the importance of a long-term invest-
> -20% 6 out of 15
ment perspective in navigating market volatility.
CY2004-2025 YTD. As of Jan 31, 2025.
Should you time the market?
The resilience of the Indian stock market can be attributed Timing the market is not an easy job for most sophisticated
to several factors, including the growth of the middle class, investors. Systematic Investment Plan (SIP) is designed to
government incentives for MSMEs, and supportive liquidity overcome this tendency of timing the market by ensuring
measures by the Reserve Bank of India (RBI). With inflation consistent and disinclined investing. Remembering the old
expected to average 4.20% and GDP growth projected at adage - as boring as it may sound serves investors well in
6.7% in FY26, the economic outlook remains favourable. the long run - "Time in the market is more important than
timing the market."
In this context, how should investors navigate their portfo-
lio in the current market?
Where and how to invest?
Categories like Balanced Advantage Funds and Multi Asset
Should you stop your investments?
Funds, which are designed to take active asset allocation
Investors should ideally not rush to pause their Systematic
calls can enable you to tide over the current volatile mar-
Investment Plans (SIPs) because the market is trending ket with ease.

A golden thumb rule of deciding your equity/debt allocation
can be based on the time horizon of the goal. For instance,
if your goal is say seven years away, you may consider hav-
ing a higher allocation to equities, depending on your risk
appetite.

When to rejig your asset allocation?
If you are closer to achieving your goal, it is wise to start
shifting your allocation towards debt to protect your cor-
pus from the volatility of markets.

Leveraging the above discussed strategies and taking the help
of a trusted advisor can empower you to make confident and
informed decisions about your investment portfolio.

BANKING FINANCE | MAY | 2025 | 27