Learn from history. Stay invested!
The Covid-19 pandemic continues to spread across the world with no immediate solution in sight. Economies and stock markets have been badly hit. But, even is such times, can we not keep our composure and let the storm pass? While everyone is jittery about their investments and losses, can we not keep our cool and learn a few lessons from history? Let’s go back in time to understand!
We have seen pandemics before and every pandemic has left a deep impact on markets. However, every sharp fall has been followed by a recovery, and markets have emerged stronger than before. The trick in such situations is to stay invested and profit from an eventual correction.
Let’s look at the BSE Sensex during all such previous pandemics and check how this supports our argument.
Now, the COVID-19 crisis appears much bigger than anything we’ve witnessed so far. But a larger crisis needs a smarter approach and, therefore, this is a time to avoid any panic and stay invested. Exiting at current levels will end up converting any notional loss we have on our investments into a real one. So, if you have a good script or invested in mutual funds, stay invested as you will recover you losses over time. However, if you have cash that you can invest for the long term, this may be a great time to start. However, avoid committing your monies in one go. You should adopt a cautious and calibrated approach.
While this may sound easy, finding the right investments to make may be a tough task in these times. This, possibly, is best left to an expert. Go for a SIP. And, if you are already investing in mutual funds through SIP, you may consider increasing the value since you will benefit by buying at reduced unit prices.
So, as suggested earlier, one can draw a lot out of history and breathe easy. Have patience and focus on your long-term goals. You might reach the end of the tunnel sooner than you think!
Stay positive, stay invested in safe funds!