The stock markets crashed on manic Monday as China’s economy continued to stutter and the resultant global sell-off reached Indian shores too. However, this is not the first time that the Indian stock markets have plunged by over 1,000 points in a day and it won’t be the last. On that ‘fateful’ day, financial advisers’ phones wouldn’t stop ringing. Everybody wanted to know about what’s going to happen here onwards and what should their next move be. Indeed a stressful situation for all. Find out here what you need to do if you face the same situation in the future:
#1 Lessons from the past
We learn best from our own experiences. Do not let the imaginary cloud of doom and panic block your thinking. Rise and fall of share prices is a given for equity markets. Sentiments keep changing but this fact is constant. Always keep this in mind while dealing with stocks.
#2 The investments pizza!
Think of your all your investments like a giant pizza. Now, you don’t want your pizza for 8 suddenly shrinking into a pizza for 2 cause of the market drop! Hence, each slice of the pizza should be allotted for a particular/specific type of investment. Your equity investments should be a slice of the pizza.
#3 The balancing act
The investment portfolio must be a healthy mix of risks and returns. While equity offers high risk and high returns, one must also invest in less risky and fixed return schemes. Fixed deposit schemes, investments in debt funds, government bonds, debentures, et al must be a part of your portfolio. This will add the stability factor to your portfolio and peace to your life. It is good to have an element of certainty while taking the adventurous equity ride.
#4 Pick binoculars over the magnifying glass!
Like all significant goals in life, achieving investment goals requires time, persistence and effort. If you are generous with these three ingredients, the recipe cannot go wrong. Swinging prices, peaks and dips are minor hiccups on the way and should not deter you from achieving long term investment goals. Be confident about your investments and continue being focused at all times.
#5 Strategize to win
Refuse to be a part of the herd. You are an intelligent investor with a personal goal. Chalk out a strategy that suits you. Measure your risk appetite while being ambitious and confidently pave your own path. Consider the above pointers and draft your own winning strategy. Read more, speak to experts and stay updated.
So, don’t let the stock market crashes influence your decisions. Stay focused on long term gains. Invest in fundamentally strong companies or funds investing in such assets and shift your focus from daily stock price movements to knowing more about the industry, global environment and scouting for lucrative sectors offering investment opportunities. Markets pay-off in the long run comes to the disciplined investor.