The times are such that we have an exaggerated sense of fear with global collapse of assets like never seen before. Here is what we need to do in the current scenario.
We are currently witnessing a swift and sharp correction. For many of us this may not be new, but the suddenness is surprising for all of us. The mood world over is tense hoping for a solution to COVID-19. While many countries, governments and global institutions have been working overtime to contain the situation, we need time to see how all these measures and efforts play out. Likewise, the times are such that we have an exaggerated sense of fear with global collapse of assets like never seen before.
Here are our few actionable points:
1. Keep Calm
This too shall pass, we have seen such sudden deteriorating conditions before, they don’t last forever. Be patient and don’t take any hasty decisions. What has gone down, will come up! This sudden swift correction could also bounce back, even more dramatically.
2. Focus on the long term
Don’t miss this opportunity in disguise. Irrespective of the amount, invest a little more, increase your SIP. If you don’t have more money to invest, it’s probably not the best time to withdraw or redeem. Keep SIP-ing. Though one is not sure of the market conditions tomorrow, we know that in 5 years from now this will be looked back as a great opportunity to invest. There have been many instances in the past where markets have corrected significantly and bounced back equally sharply and made money for investors.
3. Stick to your original goals
If you have planned out an investing road map with specific goals, make sure you don’t toss it out because of the short term volatility. Stay the course of your financial plan. Stick to your goals, sometimes the wait may be a bit longer but if done right, you will eventually get there.
4. Resist the urge to sell
When one witnesses a meltdown in the markets and portfolio values decreasing, there is a temptation to sell and buy lower. This seems very simple and probable but never quite works that way. One is never able to catch the lowest point or bottom of the markets. The best course of action apart from staying invested is to add some lump sums and keep the SIP going.
This may not be for everyone but a correction in the markets gives the investor a better perspective of their risk reward and may be one could re-allocate assets, funds and liquidity appropriately based on their goal or needs.
(By Santosh Joseph, Founder and Managing Partner, Germinate Wealth Solutions)