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Investing in All-Time High Markets

         Investments in All-time High Markets
               Rise of Sensex in 2020-2021
(Image Updated on 31st August,2021)
As you read this article,the Sensex as well as the Nifty has scaled new heights touching their all-time highs.These indexes which had crashed in 2020 because of the pandemic have almost bounced back 100%.Thanks to the ongoing bull run in the Indian stock markets,these indexes have reached 54K mark and 16K mark respectively.The stocks in both 2 markets have given multibagger returns to the investors and traders in the last 1 year.Some stocks have also zoomed 5000 times!
   Multibagger Returns of Aditya Vision Shares
This sudden boom can be attributed to the introduction of a large no.of demat accounts in the stock markets.These amateur investors have recklessly invested money in all sorts of stocks without even considering their financials.However,one cannot expect such bumper returns every time.And very soon severe corrections are expected.
                              Warnings!


But,as we are here,we will make ensure an investment portfolio which would keep it safe while growing at the same time.

I)Lowering Expectations:
The pandemic has rendered many people unemployed.Many of them have tried their hands in various occupations other than their field of expertise.Many of them have resorted to stock market investing.According to a survey by BSE,around 19 lakh demat accounts were opened in March,2021 alone.
                The Rise of Retail Investors
These new investors have got multibagger returns on their investments.Their stocks have zoomed to their record highs.However,now is the time when they must tone down their expectations.Such returns are not permanent.There are various instances where investors have faced severe losses due to reckless investing.

While stocks may seem pretty promising,they are not for inexperienced people looking to earn a buck in no time.And very less people are aware that in the current situation when our GDP is in negative numbers, corporate earnings are not great,such bumper returns means buying shares in large quantities.This is called a bubble when stocks are highly volatile and overvalued.

At the same time,however,some companies have genuinely done good business which has resulted in the capital appreciation of their share prices.For example,shares of steel manufacturers have already sky-rocketed because of the amount of exports they have done in FY 2020-2021.
               Multibagger Stock-Tata Steel

II)Asset Allocation:
    Ideal Asset Allocation by Team FactChecker
During such times,when the market is overvalued,one should must try to allocate all his/her resources in diverse funds and things.This makes all of your investments much more safer.There are various investment avenues such as gold,equities,real estate,bonds, cryptocurrency(We don't completely recommend this crypto stuff.)Asset allocation can ensure that there is no sudden fall in the net wealth.


III) Staggered Investments:
Valuations are on the higher side and investors are scared to make lumpsum investments into equity mutual funds. To tackle this, financial planners suggest a systematic transfer plan (STP) as it helps them stagger their investments over a period of time.
STP is a process by which you stagger your in vestment over a period of time. This helps you maintain a balance of risk and return.Under STP ,a mutual fund house allows investors to invest a lump sum amount in one scheme and transfer regularly a pre-defined amount into another scheme.

In an STP the money remains invested in a liquidultra short term fund, until it is transferred to equity fund. This money parked earns a return, which is generally higher than that of a savings bank account. 
If your allocation to debt increases, money can be reallocated to equity funds through STP and also for switching back from equity to a debt fund.

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Disclaimer:
We are not certified financial experts but the claims made in the blog are totally true.We will not be responsible for any kind of financial problems based on reading this blog.Investment in securities(stocks)market are subject to market risks, read all the related documents carefully before investing.

This is the 6th blog in the Finance series.

This article contains some valuable inputs by Charushree Agarwal.She is not only a excellent photographer but also keeps tabs on news and reports related to the stock market.

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