A common joke about investors making money from stock markets is that those who don't monitor their portfolio regularly or churn too often are the ones who make money. But ask an active investor and he will tell you that he hates to have any positions before a long holiday or break.
So, during this Christmas vacation, should you put your portfolio to sleep before taking off?
The question of managing portfolio in absentia comes up only when you are dealing with equity. Most other investment products like debt, property or even gold (considering that it has been moving up only) don't require a regular check-up. On the contrary, equity, as you would have noticed, can erode or improve in a matter of weeks. But managing portfolio during long breaks may not be necessary for all, and hence, one needs to take into account a number of factors.
Not for SIPs
Your presence is least expected if you have signed up for an auto debit option like systematic investment plan (SIP) or systematic transfer plan (STP). Both these options are time-bound and hence do not require the intervention of the investor. In fact, those who take long breaks during December can opt for a daily STP or a weekly transfer option of any aggressive mutual fund to take advantage of market volatility. Besides, you can also look at the trigger option facility offered by various funds. This allows an investor to switch between debt and equity, and more importantly, will allow you to take advantage of sharp spikes in prices.
Keep away from equity
Many make it a point to move away from equity trading completely once a year when on vacation. The logic is cash in hand is a better option than worrying about the market volatility when you are away. It is not a bad idea and for those who log out in December, the opportunity loss too is not significant as markets too generally have minimal activity.
Switch to debt
One of the good things about fixed instruments is that they don't give any surprise. An investor will not be hassled by a deposit hike of 0.5 percent in his absence and on the contrary, most investors are passive and don't bother about the prevailing rate of interest when they park money in debt.
So, active traders too can unwind their positions and switch to liquid funds during their annual breaks.
Why bother?
All these tips are irrelevant if you are a long-term investor and building wealth for long-term needs. For instance, a few days of absence from the stock markets should not deter you from investing if a stock is picked up with a 3-5 year horizon. While a notional loss (as has been the case during the last few days), could cause worry, it is unlikely to be a deterrent for wealth creation.
More importantly, in this era of networked world, it is difficult to keep away from the happenings of different markets. And those who take professional help for their money management have much lesser worry on their hands as their active management is not a necessity.
