Dubai: In a volatile equity market, first time investors should invest with a longer time frame, to avoid being on tenterhooks all the time.

“If you have 5 year time horizon then you don’t have to bother about volatility. They won’t have to focus on huge daily and weekly volatility in markets,” Saleem Khokhar, head of equities at National Bank of Abu Dhabi asset management group told Gulf News.

“This will give the investor the ability to ride through volatility and benefit from the long term capital appreciation growth stocks,” said Khokhar.

The Dubai Financial Market General Index, which has gained nearly 40 per cent so far in the year, has witnessed huge bouts of volatility due to crude oil prices and other happenings in the world economy, from the US Federal Reserves’ delay in raising rates to Japanese economy slipping into recession again.

Even the Fed wrestled with whether to nod to financial market volatility and a weakening global economy in its policy statement last month, but opted not to out of worry it could send an unwarranted signal of pessimism.

Minutes of the U.S. central bank’s Oct. 28-29 meeting released on Wednesday also indicated a vigorous debate among policymakers over how much weight to give to signs that inflation expectations were slipping, potentially undermining their effort to bring the pace of price increases back up to their target.

“It all too easy to be frightened out of the market in times of voalatitilty. Incredible displine is required in managing short-term equity positions.

The biggest mistake made by the retail investors is exiting at low and entering at highs,” said Khokhar.

Save systematically:

Financial advisers say first time investors should invest on a monthly basis and avoid taking loans to invest in the market.

“Savings should be in a systematic monthly plan to get a weighted average cost rather than to get to time the market,” said Khokhar. “You should only invest what you can afford to lose. People shouldn’t prefer taking a loan to invest as it can be harmful during periods of high volatility.”

Diversify:

“You should not have everything in equities, and some of the money should be in sukuks, real estate and fixed income. Diversification is key and highly recommended,” said Khokhar.

This could help in mitigating risk by putting all eggs in one basket. While stocks represent the most aggressive portion of the portfolio, bonds provide regular income and less volatility than stocks, and can act as a cushion against the unpredictable ups and downs of the stock market.

Investments in gold could act as safe haven in uncertain times.