What an investor should do at this Fall?
Today 9th March 2020 BSE Sensex falls more than 1900 points ( -5.34% ) and closed at 35634, which is approximately 16.6% fall from the peak of 41,932 on 16th Jan 2020.
There is undoubtedly a huge negative sentiment and this is the biggest fall since 2010 . There’s a fear that coronavirus could turn into a pandemic and this has led to a total carnage on Dalal Street. And of course the overnight development on Crude Oil fuelled the fall on the stock market.
The world economy is facing a domono effect and Indian Markets is not isolated from rest of the world. Even on 6th March the indices wiped out Rs 5 lakh crore worth of investors’ wealth… within 5 minutes of opening on Friday.
Few investors are taking their money out of stocks and seeking safe havens like Gold.
Should you do the same? Let’s go back and check some worst affected pandemic which the world have faced in the past.
When it comes to Equity investing, never follow the herd mentality. Be mindful about your investment. Remember most of the people who made their money in the stock market when there is an opportunity for bottom fishing like this fall and staying with the market for a longer term.
What an Equity Investor can do at this juncture is
- Stick to your asset Allocation.
- If you are buying, Stick to good companies, best performing funds and diversify within the Categories
- Call your Financial Consultant for a review meeting and choose Right Asset Allocation with your Risk Appetite and Investment Horizon
- Alternatively you can also choose to invest in Dynamic Asset Allocation Funds.
This fund returns are stable and do not fluctuate like equity mutual funds.
Consider this, as on 9th March. In Small Cap Index – 1 Year Returns are Negative 8.24%, 2 years returns are Negative 24.79% and 3 years returns are Negative 2.72%
In Mid Cap – 1 Year Returns are Negative 4.11%, 2 years returns are –Negative 12.3% and 3 years returns are 5.62%
In Nifty Index – 1 Year Returns are Negative 0.5%, 2 years returns are 7.61% and 3 years returns are 22.06%
It’s indeed a good time to invest your money into small cap. However before you make a decision to invest your money into Small Caps, we need to consider your Current Asset Allocation, Age and Risk Appetite before we invest. Investor can look at investing a very low participation on small cap if you have 5 year horizon / duration for your investment.
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