SIP – A Powerful Tool Against Volatile Markets: Here’s Why
Entire world is in a frenzy over the spread of Covid-19. I was following the global spread of the virus and its economic impact since early January 2020. While the markets initially showed a lot of restraint, as the virus spread across countries, fear and panic took control and markets started crashing. I was hopeful of a cure soon and kept telling global investors to keep calm and ride out the storm. However, before I knew it, the virus was on our shores.
Health implications aside, the Covid-19 has hurt economies around the globe. Since January 30, 2020, when the virus reached India, the number of confirmed cases has been on a steady rise and the markets have been in a nosedive. While it seems scary, this is not the first time the markets have responded to a crisis in this manner.
Quick tips for Investing during Volatile Times
- Patience bears fruit: If you have a running SIP, then continue it. Give disciplined investing a chance to work for you
- Avoid panic selling: Any investment decision made out of emotions is usually counterproductive. During volatile times, panic can make the decision of selling seem logical. However, remember that historically, markets have always bounced back
- Focus on a long-term investment horizon: As soon as the crisis is averted, the markets with start focusing on the fundamentals again. If you have invested in assets with strong fundamentals, then you will stand a chance to earn huge returns
- Diversify: Volatile markets also highlight the need for diversification. It helps reduce risks