Pratibhuti

How To Safeguard Your Portfolio from a Market Crash

As an investor, one always seeks the best return on capital investment, and a stock market crash is definitely something you wouldn't want.

However, while you can’t avoid market crashes, you definitely can prepare for portfolio security.Here’s how you can safeguard your portfolio against a stock market crash

Types of stock market crashStock market crashes can be broadly divided into1. Minor stock market crash• When the stocks are corrected between a value of

5%-30%. These happen often and the dip doesn’t last for long.

2. Major stock market crash• When the index crashes by 50% or more, it is

termed as a major stock market crash. The 1624 points by which BSE crashed in August 2015 is a good example of a major stock market crash

What to do during minor stock market crashes

Don’t sell off all your stocks at one go. Minor stock market crashes don’t last long and often prices rise after a fall. If you worry and sell off all your stocks at once, you never know when prices may rise and you may end up re-buying them at a higher price.

Invest in high quality stocks while markets are down. After minor market crashes, stocks usually revive in a few days and there are low or no chances of the investor facing a loss.

What to do during major stock market crashes

Sell off your stocks as soon as possible, without waiting to see the future of the stock. You may not gain anything, but that’s always better than facing a bigger loss.

Keep enough cash in hand available so that you can invest in new stocks. Make sure you invest in high quality stocks which have shown good growth in the past.

While crashes, whether major or minor, maybe unavoidable, you can always stay safe by following these simple rules. Lastly, don’t panic. Visit your financial advisor and get regular tips to stay safe.

Pratibhuti

Thank you