{"id":12089,"date":"2020-10-19T06:32:29","date_gmt":"2020-10-19T06:32:29","guid":{"rendered":"\/blog\/?p=12089"},"modified":"2025-01-13T11:59:06","modified_gmt":"2025-01-13T11:59:06","slug":"safe-investments-to-ride-out-market-volatility","status":"publish","type":"post","link":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/investment-guide\/safe-investments-to-ride-out-market-volatility\/","title":{"rendered":"Safe investments to ride out market volatility"},"content":{"rendered":"\n

Introduction<\/strong><\/h2>\n\n\n\n

Most guides and sources will,\nbefore providing any explanation about any investments, warn you that investing\nis a tricky balancing act, one that requires thorough research, willingness to\ntake risks and, that, despite all you can do to prepare, investing requires,\nmore than anything else, an investment instinct. <\/p>\n\n\n\n

However, sometimes, even the\nbest investor might not be able to weather a storm of volatility.  In a volatile market, torn between bullish\nand bearish phases, the singular most important factor that might help\ninvestors stay afloat and minimize their losses, is a highly diversified\ninvestment portfolio. But before we dive into the functioning of the market and\nhow to neutralize its effect, we first must establish what a volatile market\nreally is, and why it is an inevitability every investor must prepare for. <\/p>\n\n\n\n

Volatility in the Market<\/strong><\/h2>\n\n\n\n

Volatility is defined as the\npropensity for returns to be dispersed for any given market index. Market volatility\nimplies that prices in that market move at a quick and unpredictable rate. For\ninstance, while an investment option may appear to be a safe and fruitful\ninvestment, if that security is part of a volatile market, its price could\neither skyrocket or in most cases, drop. Volatility breeds further volatility,\nas security prices are largely dictated by the whims and fancies of investors,\nand investor beliefs, particularly in the equities market. <\/p>\n\n\n\n

Thus, the only real way to\nprotect against volatility in the market is to diversify one\u2019s portfolio with\nshort and long term investments; a combination of riskier investments that have\na higher and quicker payout, and longer-term investments that are less\nsusceptible to market forces and provide steady, albeit reduced returns. This\narticle will help outline a number of investment options that may help investors\nmake it through a volatile market with their losses minimized. <\/p>\n\n\n\n

1. Invest in high dividend stocks<\/h3>\n\n\n\n

One unique way to\nprotect against the negative effects of a volatile market on your portfolio is\nto invest in stocks with high dividends. \nIn a market that is crashing or is in a waning period, the income you\nearn in the form of dividend payment from these high dividend stocks can\nprovide some cover against crashing stock prices. However, it is worth noting\nthat due to a combination of the fact that higher dividend increases demand\nwhich increases the price and that high dividend stocks are most likely to be\noffered only by larger corporations, investing in high dividend stocks can be\nan expensive one.<\/p>\n\n\n\n

2. Invest in value stocks<\/h3>\n\n\n\n

This next method\nof investing that may help ride out market volatility is to invest in value stocks.\nValue stocks put in simpler terms are stocks that offer the best deal. A\nbargain. A stock that has temporarily fallen not because of slack in\nperformance, due to factors external to the functioning\u2019s of the company such\nas a lawsuit or negative media coverage, but has a strong core business model\nand can thus be expected to recover quickly. \nThese stocks have reduced prices as they are looked at by investors with\ncaution. While identifying companies that can prove to be value stocks (there\nis a thin line between a value stock and a worthless one) can be a tricky\nendeavor, they prove to be one of the best long term payouts. <\/p>\n\n\n\n

Additional\nRead:<\/strong> <\/strong>Which Investment Option Is Best\nFor The Risk Averse Investor?<\/a><\/p>\n\n\n\n

\"Investment<\/figure>\n\n\n\n

3. Cash and other safe assets<\/h3>\n\n\n\n

Cash, or liquid\nmoney is most sought after by any individual who is in the pursuit of wealth as\nit is quite literally money in hand, and cannot be touched by interest rates,\nstock prices or tax rates. From an investment viewpoint however, cash is the\nworst investment, as there is no possible way of multiplying it, short of\ninvesting it elsewhere. However, while one must not hoard all their cash,\nhaving a secure and safe amount of cash saved up for a rainy (or volatile) day\nmay prove to be paramount is minimizing losses. The fact that cash cannot be\nmultiplied, from a glass half full perspective also means that it cannot be\ndivided or dissipated further. Therefore, even in a volatile market, the cash\nyou have in hand, will hold its value regardless of how vigorously market\nforces sway. <\/p>\n\n\n\n

Storing this cash\nin relatively stable investments such as Gold, commonly regarded as the crisis\ncommodity, is also a great way to invest in times of volatility. This can be\nseen very clearly in the Covid, pandemic, where demand for Gold has surged over\nthe course of the year. Gold has always moved contrary to the market, and is a\ngreat means by which to park excess cash and possibly get a return in the\nshort-term, though it is now a little prohibitively expensive, and is highly\nvolatile itself, fueled as it is by investor outlooks. <\/p>\n\n\n\n

Additional\nRead:<\/strong> <\/strong>What should\nbe your investment strategy in a post Covid world?<\/a><\/p>\n\n\n\n

Conclusion<\/strong><\/h2>\n\n\n\n

Though Investing can be an extremely lucrative and exciting endeavor, one must always keep in mind that it is also a risky one, particularly in times of volatility.\u00a0 Investing safely should be prioritized over investing more and making risky investments. If you\u2019re looking to invest in today’s economic climate, the Moneyfy mutual fund app<\/a> by Tata Capital can help you create an investment strategy suited to your financial goals. Using it, you can compare a variety of Mutual Fund investment options, track your financial goals, and even secure loans and insurance. <\/p>\n\n\n\n

Download Moneyfy App<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

Most guides and sources will, before providing any explanation about any investments, warn you that investing is a tricky balancing act. <\/p>\n

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