What should be the strategy for someone who has already redeemed a major part of the equity investments in anticipation of a market crash?
- Rashmi Duggal
You are not alone. So many people were tempted to get out of the market, simply because it is continuously going up and is at an all-time high. Take a lesson from this instance and look at the opportunity loss. Take note of how much you have lost by trying to time it and redeeming your investments in anticipation of a crash that didn't happen.
I usually say that if your money is already invested in equity and you want to move it to a different fund, it can well be moved in one go. But here, your mind is anchored to a certain value. So spread the money over a certain period, say six to 12 months, depending on the scale of money.
Further, work on an asset allocation plan and follow it. Because you will face the same dilemma again in the future unless you decide on a methodical way. Once you do that, you will be able to navigate such situations much more nicely. If you had been following an asset allocation plan, you would have avoided the knee-jerk reaction of redeeming your money in full. You would have simply rebalanced it to the decided allocation.