Portfolio investment rules to consider for long-term investing

How Is Jarvis Helping Investors Make Returns All Seasons?

How Is Jarvis Helping Investors Make Returns All Seasons?

If you want to be a successful investor, you need to keep things simple. However, the problem is that keeping things simple is tough. Today, the market is volatile, and investors are too worried about their investment. You should remain calm and stick to the basics as the market will continue to go up and down. We are here to help investors who are into long-term investing

Below are the top five rules long term investors should follow:

Know your risk profile – When you register on Jarvis Invest, the first step is to check your risk profile. The rule is simple – you cannot make the right investment decisions without knowing your risk profile. Risk profile has two parts to it – risk capacity and risk appetite. The risk capacity depends on your current financial condition. It can vary from as and when your financial situation changes. The risk appetite tells how comfortable you are when you experience losses. The combination of both is your risk profile.

Your risk profile will tell you what kind of financial instrument you should invest in. For equity – it helps you know what exposure you should have in small, mid, and large-cap stocks. When you invest for the long term, you need to start right. To start right, you need to have the correct allocation. If you make an investment opposite to your risk tolerance threshold, you will have a sleepless night. You invest so you can feel secure and not the other way. So know your risk profile before making any investment.

You can’t go long without diversification – In short-term investing, you may gain with investment in a few stocks. When we want to go long, diversification is essential. You should invest in stocks, bonds, gold, and real estate. We will talk about equity here. Within equity – have exposure to small, mid, and large-cap stocks. The allocation percent in each category will depend on your risk profile.

You should also invest in different sectors within each category – the idea is to create a diversified portfolio. We have seen investors investing only in one sector, and when that sector goes through a bad phase, investors suffer heavily. 

We have seen users with 60 to 80% allocation only in banking stocks. If you have such a portfolio, the right time is NOW to make the change. Whenever you pick a new company, you must check the category and how it changes the dynamics of your overall portfolio. If you can create a diversified portfolio, you reduce the risk and maximize your gains.

Regular rebalancing – Let us implement whatever we have discussed so far. Let us assume, based on your risk profile, you decided the correct allocation for you is as below:

You started with a portfolio of Rs 1,00,000 with Rs 50,000 in large-cap, Rs 30,000 in mid-cap and Rs 20,000 in small-cap stocks. In the next one year, the small and mid-cap outperform the large-cap. You made 60% return in small-cap, 30% return in mid-cap, and 10% return in large-cap.

Now the allocation based on the above returns will be as follow –

The total amount is now Rs 1,26,000. The percent allocation has changed now. Your allocation in large-cap is 43% now, the mid-cap allocation is 31%, and the small-cap allocation is 26%. The allocation that works best for you has changed. What should you do now?

You will have to do portfolio rebalancing. It must be done at least once a year. How does it work? Your allocation in small and mid-cap has increased, so you will sell some stocks there and reinvest the amount in large-cap stocks, so you get back to the original allocation.

If you invest through Jarvis Invest, you don’t have to worry about rebalancing – the app takes care of it. The calculation part of rebalancing will be taken care of by the app. Hence, it is a great tool to have for long-term investors – it makes investing simple.

Don’t worry about the day-to-day events – Currently, the market is volatile because of tension between Ukraine and Russia. Also, the inflation in the US is worrying investors as it could lead to a faster rate hike by Federal Reserves. Long-term investors should not worry about these events. In the long run – 8 to 10 years from now, you will probably not remember these events.

We have seen investors pulling out their money in such times. Don’t act following the news. Keep your SIPs going, and you will create wealth in the end, irrespective of what happens between now and the end goal.

Remember your goals – You can only apply the above rules if you keep your financial goals in mind. Remind yourself that you are investing to achieve specific long-term goals. All you need to do is follow the above simple rules, and you will achieve your goals. When the market goes down, look at your goals – calculate the time left. There is still time, right? So don’t worry and keep investing.


If you want to achieve your goals without too much effort, download our app – Jarvis Invest. It will simplify investing for you. It will take care of every aspect of investing, so you can focus on other important aspects of life without compromising your goals.

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