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Investing a large amount in one go is not considered a wise decision in the stock market. It could trouble an investor if the investment goes against the analysis in the short term. Individuals can start with a portion of the investible surplus following a staggered approach.
Right Time to Invest in a Staggered Manner
As the stock market is tumbling on fears of recession, inflation, currency depreciation, oil price fluctuation, and geographical tension, several blue-chip companies are still trading at reasonable valuations. Many foresee it as an opportunity to deploy their funds.
How the Staggering Approach in the Stock Market Works
The elements of investing in a staggered manner are diversification and investment interval. It is crucial to be sector specific. Funds should be deployed between sectors/stocks for diversification, and the investment stance can be monthly or quarterly as per one’s cash flow.
Novice investors can open their demat and trading accounts online to start investing following a staggering approach. For demat account vs trading account, you should know that a demat account is required to hold your financial securities and these demat securities can be traded on formal stock exchanges using a trading account.
Why Investors Should Adopt a Staggered Approach
- Improved Return on Investment (ROI) with Averaging
As the stock market is highly volatile and prices change every moment, staggered investing helps in averaging out and earning better returns on investment. Historically, it has been witnessed that investing in a staggered manner has always given better results than investing in one go. Investing in an index at the peak may make you wait for a long period to break even.
- Begin Small
Investing following a staggered approach helps you to start with a small amount. Even if you do not have enough funds at the beginning of your investment journey, you can begin with that available amount in your hand. You can continue investing in more stocks after arranging funds in the following months. To start small and save on investment costs, investors prefer a demat account opening online with a discount stockbroker.
- Regret Minimisation
Individuals who invest in one go may regret it later if they have not invested in the right securities. They may have to bear huge losses. In contrast, if one adopts a staggered approach, it will help them to avoid regrets.
How to Start Staggering Investments
It is crucial to be sector specific. First, investors need to identify the sectors that can add to the growth of the economy. The sector’s outlook depends on various micro and macro factors. You should know that a global event can change the sectoral view.
Investors should identify value stocks of companies with good fundamentals within selected sectors. These stocks with good fundamentals can help you to stand tall in the worst times. Fundamentally strong companies can offer good returns if you keep a long-term and broad view in mind. Once stocks are selected, you can start investing using a portion of investible capital in a staggered manner.
What Experts Suggest
- Investors should consider good stocks and put funds systematically in them. There are some attractive sectors, including banks, IT services, and Fast-Moving Consumer Goods (FMCG) industry. Valuations of certain stocks in these sectors may seem expensive. These stocks are among good opportunities as per experts for investors. Investors can consider medium-term investments to enjoy good returns between the years 2026 to 2029.
- Experts find that the market valuations are now reasonable. Also, the market would fight against global headwinds, including unusual Foreign Institutional Investment (FII) and Foreign Portfolio Investment (FPI) selling that cannot continue forever. They are concerned about whether the Indian economy can confront the rising inflation issues. Soon, considering the higher growth rate in the coming years, there will be FPI and FII buying in different sectors or themes for the long term based on their future potential. Experts believe that investors can consider increasing exposure in equities for the long term with disciplined asset allocation.
- New market entrants should keep in mind the possibility of extreme volatility before investing in equities. Investors with a long investment horizon and high-risk profile can look at deploying funds gradually in the equity market.
Thus, staggering can bring stability to your portfolio by investing in a systematic and disciplined manner coupled with oodles of patience.
Read also: Difference Between Demat and Trading Account
