From My Diary - Slump in the Market

I am not an economist, but I understand some of the issues like this one, yes but to a certain extent. The Tusnami of Economy has hit the US and has had its cascading effects in Europe, India, China, Japan & every other Developed and Developing Economy. Almost all the share indices have crumbled and are caught in the web of Bearish trends. Indian Pundits were shouting from the roof tops that our economy is in good shape and health, and that we would not be affected. How could we be insulated from such effects, when on one side we claim that the globe is shrinking and that all the countries are now intertwined with each others' fabric of economics ? I am sure that this crippling effect will continue for one and a half to two years. Many would have suffered very badly due to this avalanche. Nothing can be done now to wipe out the losses of investments made during the last 2 years or so. Probably, people who invested when the market was high, hoping that it would go up further, were caught unaware, as they did not exit in time. But how do we overcome this situation and bridge the gaps of losses made till date ? In my opinion there are couple of investment strategies which one should adopt, as under: Don't put all the eggs in one basket. Spend / Invest to suit your pockets. Don't take the route of loans for investments. Investment is real estate is always a best bet, but it has lot of risks. In case you can protect your investment then invest your money in real estate in a growing tier two or three city. Tier one cities will give you very high appreciation but then you need to invest higher amounts. FDs for 1 year terms and renewed each year for another year or two are a good proposition. Put approximately 30 - 40 % of the available balance funds in FDs. This should be your short term investment plan. Similarly Continue with your SIPs, if you have any, or take a few SIPs from this allocation. Pick up Gold or Silver on every Decline. again put approximately 30 - 40 % of the available balance funds in the bullion market. Put your left out balance, about 30 % in shares. Pick up the blue chips which have strong fundamentals , Low Debt to Equity Ratio, Good PE Ratio, and which are being traded at or around their 52 week low rates. Again pick up one or two scrips from each sector like, infrastructure ( Power, Communication, Cement & Steel ) , Pharma, FMCG, Banks etc. Stay away from Service Sector, BPOs, Airays, Software etc for a year or two. You should have the patience to lock the money for a period of 4 - 6 years for real handsome gains. Please do not wait for the market to bottom out, as you will never be able to guess that, pick up the shares in bits and pieces on every decline, now onwards. This route is for them who are prepared to take higher risks. In case you have a big heart then you can put higher percentage of your balance in shares. History has always been on the sides on the dare devils. But choice is yours. You may also pick up Mutual Funds , SIPs which are good and whose NAVs are very low and attractive. that way you get higher number of units in the same amount. This route is for people who do not have the ability to take higher risks, and are scared of direct entry in the market. I am sure your money will be safe and secure and will certainly grow.