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Why Boring Is Good For Your Financial Health

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Why Boring Is Good For Financial Health

By: Tavaga Research

In the midst of utter chaos in the markets and panic among investors, being boring seems to be the smartest choice. When everything is going haywire, there are some who are sitting back without worrying too much. 

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They are the conservative investors, who are often known as boring investors. They invest mostly in the safest of all asset classes and diversify their investments.

We take a look at the performance of the Tavaga conservative investor vis-a-vis the benchmark Nifty index.

Tavaga Conservative Investor vs Nifty
Source: Tavaga Research

The table above is the daily performance of Nifty50 and a Tavaga conservative investor in the last one month.

While everyone on the Street is just fighting to survive, the conservatives’ consistent approach remains immune to the forces bringing on a bloodbath in the markets. 

We, at Tavaga, keep getting requests from clients to upgrade their risk profile and add more risky assets to their portfolio, even from those with a risk profile that leans towards a balanced or conservative portfolio. 

In the current market situation with high volatility, such investors, with a mismatch in strategy (aggressive) and risk profile (conservative) are in danger. They would be more likely to panic and sell, liquidating their investments and racking up their losses.

Today, ie. Friday the 13th (of March), the exchanges stopped trading for an hour after Nifty fell 10 percent within 10 minutes of the market’s opening. After resuming trading, Nifty did bounce back and recovered its losses, underlining the highly volatile environment. 

That is what makes us say, ‘Being boring with investment strategy may prove to be rewarding’.

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