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How can equities help you play safe?

Most individual investors sell in panic when the markets are volatile. While it is quite natural for investors to sell in times of uncertainty to avoid the risk of further loss, it is often counterproductive when the market sees a sharp rally as was seen last year. Experts suggest that investors should stick to their asset allocation plan, remain focused on the long-term goals, diversify their portfolio, and stay away from panic in the markets.
According to them market downturns almost always open up new opportunities in areas of the market that were overlooked or overvalued before the downturn. So, instead of a complete exit, one can look at selling those stocks which are fundamentally weak and investing in those stocks that have the potential to rebound fast.
The risk in a portfolio can be reduced by booking profits when equity valuations are rising will help an investor to invest again at lower levels. For instance, one can redeem equity units accumulated over four years which have yielded returns of 15% per annum and park the redeemed amount in shorter duration funds.

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