5 Ways To Make Market Highs Investment Friendly

Stock markets are making new highs each day, leaving investors in a tight spot about their next investment move. Investors are dawned by mixed emotions of euphoria as well as utter confusion - what if market tanks down again. In the wake of this uncertainty, here’s some help for you to make the market highs investment friendly.

Photo by David Ohmer

1) Go dynamic with lump sum - Break down your lump sum investments into smaller chunks and invest it at different time periods. In this way, you will be able to buy at lower levels. Else you can wait to buy during market dips that are likely to happen around corporate results or change in interest rate cycle. However, it is a tough call to predict or identify low buying levels for a common investor, who should opt for dynamic asset allocation funds. These funds cut down their equity allocation during high market valuations and increase it when the valuations drop. 

2) No stopping of SIPs - Steer away from the urge to stop or pause your Systematic Investment Plans (SIPs) during market highs. You can potentially miss on accumulating more units during volatile market conditions if you stop your SIPs in an effort to prevent buying at higher NAVs. Let’s take a look at what can happen if you discontinue your SIPs even for a while. 

	Scenario 1	Scenario II	Scenario III
	Regular SIPs	SIP Stopped During Market Highs	SIP Stopped During Market Lows
SIP Per Month	5000	5000	5000
Investment Tenure	10 Yrs	8 Yrs	7 Yrs
Returns	12%	14%	11%
Investment Value	₹ 11,21,070.25	₹ 8,53,982.78	₹ 6,20,401.41
Takeaway	Highest corpus accumulated for all due to regular and disciplined investing	Lower corpus despite higher returns as the amount invested is lower than Scenario I	Lowest corpus accumulated at lowest returns as the benefit of low valuations not availed.

3) Don’t chase lucrative strategies - There is no quick money in the market so there is no point in falling for fancy strategies that keep pouring from all around. The only way to be a successful investor is to stay focused and disciplined and ignore the market chatters completely. You do not need to respond to market movements by doing something, rather treat it as another normal market phase. 

4) Stick to asset allocation - Downsizing equity exposure or even upsizing it is uncalled for. Your financial plan need not be fine tuned to market swings. A financial plan is made keeping in mind market movements, be it ups or downs that leave no room for altering it every now and then.

5) Monitoring is a must - Surely market highs might have helped almost all investments to deliver robust returns. But, it does not relieve you from the task of monitoring them periodically. In fact, it becomes imperative to understand if equity funds in your portfolio delivered better returns than the benchmark or not. You should continue to replace and take timely decisions about funds or investments that are not performing up to the mark. 

Knowing your way to wisely deal with market highs can go a long way in maximising your wealth.

About The Author: Reenika Avasthi is associated with Inverika Investment Solutions LLP as a Content Writer and Financial Planner. She is a Certified Financial Planner and a freelance content writer in the field of personal finance. Her interest in writing and spreading investor awareness motivated her to start blogging.