Rising inflation has hogged the limelight and made the Indian government to take necessary steps to get it down. In this scenario where almost all stocks trading bellows 40 to 50 percent from their all time high price can be excellent bet for the investors even though the world is in an apparent credit crisis.
Certainly, the inflation and financial crisis around the world has managed to drag the investor's sentiment down to some extend. It is the time when he small investor should put his money into equity for longer term. Before investing money in equity market you should divide your money according to sectors, like: 8 per cent for banking stocks, 15 percent for IT sector, 20 percent for telecom, 10 percent for pharma sector, 5 percent for textile etc. It is better not to expect more than 12-15 per cent return from equity. Despite the volatile market equity can be a good option for investors especially when the prices have dropped to such lows in recent months.
One mistake that many investors do often is waiting and watching their portfolio grow. It is good to see your money growing but you should not forget to book profit as well. Therefore as soon as an equity/ stock shows good appreciation, you should quickly book the profit. Building a well-diversified portfolio is not joke. All it needs is common sense, proper research about stocks and patience. In other words your portfolio needs timely review and correction according to the risk and liquidity needs. It is a constant job and you must always keep an eye on any of your investments if you truely wish to make money from investing.
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