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| You basically decide on this based on your beliefs about the market which may be different from ours and also availability of time you can allocate towards taking decisions regarding your investments. |
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| If you can’t allocate time, you can either work out a plan with you advisor or invest only through mutual fund route. If you are investing through the mutual fund route, you should keep (100-Your Age)% in Equities and rest in fixed income instruments as a basic asset allocation strategy. For adding more asset classes and finding out the most suitable asset allocation, you can work with you advisor on the same who will suggest you an optimum asset allocation based on your profile. |
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| Our belief is that if you are investing for the long term, you should invest in the right stocks at the right price. If you are able to find the right price for all stocks – then you can probably keep 100% in equities. But if you are not able to find the right price and market is fairly valued or overvalued, you can still keep a high equity exposure if the outlook is bright but it’s very important to hedge your positions by using derivatives (futures & options). You should invest only that much which leaves you with sufficient enough margins to hedge your positions in case of fall. You can work with you advisor to create a plan for the same. |
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| If you are trading, you should not risk more than 1% of your total trading capital in any one position and follow STOP LOSS strictly. For eg if your total trading capital is Rs. 1 lacs, you should not risk more than 1% which is Rs. 1000 in any one trade. This means if you get a recommendation to buy a stock A with price 50 and Stop Loss 48, you should buy not more than 500 shares (Max Risk divided by SL : 1000/2). So in this case if SL is hit then your maximum loss is restricted to Rs. 1000. |
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| For more information, please contact us. |
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