VOLATILE MARKET SITUATION: WILL MARKET GET BACK TO SHAPE?

The 35% market correction (as of 19th March 2020) from its peak has pulled down market valuations. Long-term interest rates in the economy have crashed in recent times.

Stock market correction is scary but will soon be normal. As the market are down most of you would be thinking what to do in current situation?

There is no prompt answer for this as it depends on individual’s situation.

For example, if you have no equity investments in your portfolio, you should start investing slowly. Or if you are exposed 100% to small-cap stocks, you should think about diversifying.

You can take some action at this point:

If you have recently entered equity markets, it might be disheartening to see your portfolio value take a free fall. Don’t lose heart. As experience in the market tells us, economic flexibility will eventually fuel the market upwards. 

Continue SIPs 

It is not as exciting as “Buy Low, Sell High” but for most investors, SIP works. The probability of losing money goes down with the duration of holding so that you can invest to make money, not for excitement.

Diversify 

Keep your investments in multiple baskets like Equity, Debt, and Gold etc.Equity can be across sectors, and market caps. Similarly, there are various kinds of debts. Liquid funds work for most investors. Diversify according to your risk profile.

However, if this drop has rattled you and you are not able to bear the risk, revisit your asset allocation. Perhaps you have taken more risk than warranted. Wait for the upturn to twist your asset allocation. 

Don’t Time the Market 

Don’t try to invest heavily now thinking that markets will go up. Or don’t try to sell everything now and try buying later thinking that markets will go down further. Truth is, it is impossible to time the market.

Play with Smaller Amounts 

If you are covered on the above three points, and still want to play the markets, do it with smaller amounts. Remember, the first rule of investing is to not lose money. Invest with long term scope.

But for now after post market correction equity valuations appear to be better from a historical perspective. While markets might fall further.

You can use GIIS Financial tools or Our Android App  for Investment, tracking and Asset allocation planning. 

*Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

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