Let’s face it, the market swings in last 2 days due to the Loksabha Election results have been enough to make even the most seasoned investor sweat. But before you hit that “sell” button or consider pausing your SIP (Systematic Investment Plan), take a deep breath and let’s talk strategy.
Its normal to have the urge to react when the market takes a tumble. However, history has shown us that short-term volatility is inevitable, and panicking can be detrimental to your long-term financial goals. Here’s why:
-
Market Downturns are Temporary: While these dips can be unsettling, they don’t last forever. The market has a history of bouncing back, often exceeding previous highs. Selling during a downturn locks in your losses and prevents you from participating in the eventual recovery.
-
SIPs are Your Ally: SIPs are designed for market fluctuations. By consistently investing a fixed amount, you average out the cost per unit over time. This means you might buy more units when the price is low, potentially boosting your returns in the long run. Don’t pause your SIP – see it as an opportunity to accumulate more shares at a potentially discounted price.
-
Buying Low is Key: Market downturns can present a strategic buying opportunity. Consider this: you’re essentially buying quality assets on sale! If you have some spare cash, now might be a good time to invest a lump sum, potentially increasing your future returns.
-
Consider investing in Bonds: Bonds typically experience less fluctuation in price compared to stocks. This can help to balance out your portfolio and mitigate overall risk. Also they generate steady returns which can help you in maintaing cashflows.
Here’s what one should do now
- Stay Calm and Focused: Don’t let fear dictate your investment decisions. Stick to your long-term financial plan and avoid reacting impulsively to market fluctuations.
- Review Your Asset Allocation: If your current allocation is too aggressive for your comfort level, consider making some adjustments. However, don’t make drastic changes based on short-term volatility.
- Talk to Your Advisor: We are here to help! Schedule a consultation to discuss your specific situation and ensure your portfolio remains aligned with your goals.
Remember, successful investing is a marathon, not a sprint. By staying disciplined, focusing on the long term, and potentially taking advantage of buying opportunities, you can use market volatility to your advantage and build a brighter financial future.
Bonus Tip: While we don’t recommend checking your portfolio daily, staying informed is important. Use this as an opportunity to rebalance your portfolio.
Let’s navigate these market fluctuations together. Stay calm, stay invested, and reap the rewards of long-term financial planning.
