Currently, everyone's portfolio is experiencing very good returns, which leads to the question: what should one do next? Should profits be booked? Many investors find themselves pondering this question, considering the favorable returns they have achieved. To provide some guidance, let's explore different scenarios and appropriate actions based on individual situations.
Firstly, it's essential to assess whether you require the funds in the near term for any specific goals, such as child education, marriage, or retirement, within the next one or two years. If this is the case, it is advisable to start booking profits and reallocate the funds into safer investment options like debt instruments. For instance, equity savings funds or arbitrage funds can be considered as suitable choices.
Secondly, if you have a conservative investment approach and prefer safety, portfolio reallocation is necessary. It would be wise to get in touch with your financial advisor and execute the planned reallocation based on your predetermined allocation strategy. Suppose, for instance, you decided on a 65% equity and 35% debt allocation. In that case, if your portfolio has now grown to 130 in total, you should adjust the allocation accordingly. Balance advantage funds and large-cap funds are viable options for conservative investors.
On the other hand, if you are a growth-oriented long-term investor with a time horizon of 5 years or more, it is advisable to stay invested and hold onto your investments for a multi-decade growth run. Regularly review your portfolio with the guidance of your financial advisor, and consider investing in multicap, midcap, or small-cap funds based on your risk appetite.
The rationale behind this approach is that the economy has shown significant growth, even amidst higher domestic and global interest rates, and now there seems to be a pause in interest rate hikes. This situation may lead to further growth and earnings for the economy and companies. Hence, there might not be an immediate need for action or making hasty decisions that could potentially lead to complications.
In summary, the key is to align your actions with your investment goals, risk tolerance, and time horizon. Seek advice from your financial advisor to make well-informed decisions and avoid unnecessary trouble by making impulsive moves. Remember to regularly monitor your investments and enjoy the rewards they may bring.