Investing Fundamentals

Sticking to the fundamentals of investing

In the current financial landscape, where global stock markets are experiencing significant turbulence due to various factors, investors are faced with a crucial task – safeguarding their capital. The ongoing volatility, exacerbated by the uncertainties surrounding the COVID-19 pandemic and related lockdown measures, has taken a toll on investor wealth. This has left many wondering about the best course of action in such challenging times.

Even the Indian market, typically known for its resilience, has not been immune to the ripple effects of the pandemic. Customer sentiment has weakened, oil prices have plummeted, and the commodity market is bearish. In this climate, rising gold prices have attracted some investors, but overall, real estate and traditional investment avenues are currently less appealing.

However, does this mean that investors should completely retreat from the markets and adopt a wait-and-see approach? Not necessarily, according to Indu Awasthi, VP of Investment Advisory at Quotient Digital Solutions. She believes that investors should remain engaged in the market while adhering to essential investing principles.

One of the most critical factors, she emphasizes, is controlling emotions. In the current scenario, capital protection should be the primary objective. Therefore, any investment in the markets must be highly strategic. Awasthi suggests that with both equity and debt instruments available at historically low costs, investors should approach the market as they would during a sale season – with a discerning and well-thought-out strategy.

A Moment for Fintechs to Shine

As lockdowns continue and investors seek to optimize their gains through improved asset allocation, fintech firms have a unique opportunity to demonstrate their value. The current situation has underscored the efficacy of technology in certain domains, and online financial services platforms are still enabling investors to participate in the market while traditional asset management firms and their associated entities grapple with lockdown-related challenges.

Awasthi notes that AI-driven digital platforms offered by banks and fintech firms not only facilitate seamless transactions but also provide data-driven advice on daily buying and selling decisions. Given the importance of having a purpose behind every investment, these platforms leverage algorithms to select stocks and investment schemes. Moreover, they personalize investment recommendations based on individual investor profiles, enabling more informed decision-making in today’s complex financial landscape.

Reviewing Your Portfolio with Fintech Tools

For investors, the lockdown presents an opportunity to reassess their investment portfolios. Numerous wealth management tech tools are available to help individuals determine if their asset allocation aligns with their risk tolerance and financial goals. Some of these tools include ArthaYantra, ValueResearchonline, MoneyControl, and Capital Quotient, the latter being operated by Quotient Digital Solutions.

Awasthi explains that these platforms align investment portfolios with the time horizon of an individual’s financial goals. For instance, if an aggressive investor has a short-term goal to achieve within six months, it may not be advisable to allocate a significant portion to equities. Conversely, if a conservative investor is planning for retirement in 20 years, an over-allocation to equities may be suitable given the longer-term horizon.

Fintech platforms offer valuable assistance in evaluating financial goals and optimizing asset allocation for each objective. They empower investors to determine whether their allocation to equities is under or over-allocated, providing a more nuanced approach to wealth management and investing fundamentals.

In conclusion, the current market conditions, while challenging, present an opportunity for investors to reevaluate their strategies and leverage fintech solutions to make informed investment decisions. By maintaining emotional discipline, focusing on capital protection, and utilizing technology-driven tools, investors can navigate volatile markets with confidence and purpose, ultimately working towards achieving their financial goals.