If the fear of stock market losses is holding you back from making your debut on the bourses, then you are not alone. Investors can buy and sell company shares in the stock market, hoping to profit from price movements.
However, the stock market is not only unpredictable but also volatile. Sometimes, investors may face losses due to unfavorable stock price movements triggered by economic upheavals and impulsive selling, buying, or picking up poor stocks.
Therefore, it is crucial to have some strategies to minimize the losses and protect the capital before you start your stock market investing race. One of the best ways to do that is to seek guidance from a SEBI registered advisory.
This article details the five best strategies to minimize stock market losses. So, before we start the party, let us understand why choosing the right advisory is the first step of your investment journey.
Why only a SEBI registered advisory when you have plenty of other resources available in the market?
A SEBI registered advisory is a professional body authorized and registered with the Securities and Exchange Board of India (SEBI) to provide financial advisory services to clients.
A SEBI registered advisory must comply with the code of conduct, disclosure norms, and minimum qualifications and experience requirements set by the market regulator, SEBI. By hiring such a company to manage your investments, you can benefit from their expertise, experience, and ethical standards.
A SEBI registered advisory can guide your equity investment journey, helping you achieve your financial goals, such as buying a house, planning your child’s education, or maybe your next vacation to a foreign destination you have always longed for.
Moreover, a SEBI registered advisory can provide unbiased and independent advice based on sound investing principles, such as diversification, risk management, and discipline.
5 Best Strategies to Minimize Your Stock Market Losses
- Asset Allocation Strategy: Asset allocation distributes your funds among asset classes, such as equity, debt, gold, and cash, based on your risk profile, investment horizon, and financial goals.
Understanding your investing traits is more challenging a job than it seems. Here’s when you need the help of a SEBI registered advisory. Such an advisory helps you prepare the best stable stock mix that matches your personality and interests.
SEBI registered advisory uses various tools and methods such as setting up the proper stop-loss, identifying the best entry and exit points, preventing over-exposure to a particular industry or theme, and many more to minimize stock market losses.
- Value Investing Strategy: This is a way to invest in stocks undervalued by the market based on their intrinsic value. It can help you buy low and sell high and earn higher returns in the long term.
A SEBI registered advisory uses various metrics and ratios such as price-to-earnings, price-to-book, dividend yield, and margin of safety to identify value stocks.
- Long-term Investment Strategy: Long-term investment can help you exponentially grow your portfolio, save taxes, and reduce your anxiety and stress, which is a natural by-product of constant monitoring of your portfolio.
A SEBI-registered advisory helps you smoothly ride through the market volatility and knows the best time to exit safely.
- Diversification Strategy
Diversification spreads unrelated investments over several asset classes, industries, and geographic regions to minimize an investment portfolio’s overall risk. It contributes to a steady overall return since the poor performance of one investment can be offset by the excellent performance of another.
By following the advice of a SEBI registered advisory, investors can diversify their portfolios effectively and minimize their losses in the stock market. It also monitors the market conditions and advises you on any changes affecting your portfolio performance.
- Rebalancing Strategy
Rebalancing your portfolio is adjusting your investment weightage to match your desired asset allocation. Rebalancing helps you avoid stock market losses by concentrating on a single asset class and reducing the impact of adverse market sentiments on any particular asset.
A SEBI Registered Advisory can also assist you in reviewing your portfolio regularly and making modifications based on your changing demands and market conditions. They can also advise you on the best frequency and rebalancing technique, considering transaction fees and taxes.
Key Takeaways
The stock market can cut both ways. To minimize the stock market losses and maximize the gains, investors should follow the five best strategies discussed above.
Seeking advice from a SEBI Registered Advisory provides the necessary expertise and a tried-and-tested method for generating long-term results. So, before swimming into harsh seas unprepared, it is always best to plan your investing path and take necessary precautions.