MF investments during bull markets: Answers to your FAQs

When markets are at an all time high, certain investors like to wait for correction before making their next money move. But this can result in a missed opportunity.

While it's common belief that long term investors gain the maximum out of mutual funds, here are things you should remember while investing in mutual funds when markets are high.

The first step should be to review the portfolio. You must have designed your initial portfolio at a time when market trends would be quite different.

During a bull market, value of certain stocks change. Thus, it's important to review the portfolio and eliminate stocks that don't add value to your financial goal now.

How to prepare for market crash

Watch out your risk preferences before luring the idea of accumulating maximum wealth during a market high. Thus, to avoid any risks, rebalancing the portfolio in accordance with current market trends seem the right move.

Diversify your portfolio. In a rising market, a concentrated portfolio can only increase your chances of losing money. When markets look really positive, one needs to diversify.

In portfolio diversification, you should include stocks of different varied market capitalization. This will balance out the risks attached to a particular asset class. One can invest in large-cap stocks which is believed to be stable during such volatility.

Nifty surpassed 17,400 mark in intraday, on Monday

Bull markets are often accompanied with fund houses launching lucrative new offerings. Several New Fund Offer (NFO) can be spotted at this time. They promise outstanding returns but provide little transparency in its approach. Don't succumb to herd mentality and avoid investing in products you don't understand.

All said and done, market highs and lows are a part of one's investment journey. The volatility shouldn’t really bother long-term investors. Keep an eye on your goals and invest as per your understanding.