Knowing when to accelerate, decelerate, and pause your investments in equity is very critical for every investor. Investors are always looking to accelerate their investments in equity. In fact, investors want to accelerate their investments when markets are trading at elevated levels. Investors are more willing to invest their money at faster rates when valuations are higher. When the valuations start falling, investors continue to accelerate their investing with the hope that markets will reverse quickly. Most dips in the Indian markets have been bought into because of this expectation. But these expectations need not play out in the expected way. We will experience times when the opposite of what we expect could happen.
Knowing when to decelerate your investments into equity is very critical to safeguard your portfolio from drawdowns. While you still need to invest in safer parts of the equity market, you must make sure not to allocate money to the super expensive parts of the market. Slowing down will help you pause and think clearly. As long you find attractive opportunities in safer parts of the equity market you should continue to pursue them.
The time to completely pause your investments in equity hasn’t arrived yet. For now, slowing down and focusing on safer parts of the market should be your priority.