They say the right time to plant a tree was twenty years ago, and the next best time to see the seedling grow into a tree will be 20 years later which means you should invest NOW!
Likewise in the markets too, invest and stay invested for the long term.
Serious wealth creation happens only then.
This question was clear until the Ukraine-Russia crisis happened and suddenly all of them started doubting!
During such unforeseen situations, and under such extraordinary conditions of war it is difficult to make investment decisions.
One can’t predict a catastrophe but surely can be prepared or plan accordingly.
In this blog article let’s understand if the investment thumb rules change or remain the same during disaster situations!
Impact on the Stock Market
As every nation is interconnected with each other directly or indirectly the rattling impact surely was witnessed in the Indian Stock market.
The volatility tsunami started rising when the tensions between Russia and Ukraine took the limelight in the week gone by as military operations by Russia spooked investor sentiments.
However, they have seen a steady recovery in the benchmark indices on Friday, gaining a whopping 2.5%, even as Russia started progressing in the significant areas of Ukraine.
Not just that, the week ended trembling by over 4% compared to the previous week.
This volatility wave dance was an outcome of various reasons from military action against Ukraine by Russia where a sharp rise in crude oil prices and F&O expiry provided more power to bears in the Indian Stock Market.
The situation is expected to still spiral down as the severity between the nations are increasing.
Therefore, the volatility dance is expected to continue for a while now.
The Macroeconomic Statistics had a super busy week where it touched data points like domestic GDP and Manufacturing & Production PMI data.
As the Indian Stock market holds a lot of scopes, there is relief seen as FIIs are right now into buying the index future and stocks futures. The Put call ratio is right now sitting at neutral.
Crude oil prices are skyrocketing and trading higher than $100 per barrel. Note that this will add to the raw material costs and squeeze margins of India Inc.
What should Investors do?
In such a volatile market, a sensible approach is to have a balanced portfolio with a mix of equity, debt, gold, and cash.
It is a perfect opportunity for investors to accumulate shares as the prices are low.
This is a golden opportunity for term investors to add or search for businesses with great fundamentals and take positions respectively.
When there is a global catastrophe accompanied by rising crude usually it is advised to naïve or occasional investors to stay away or be on the margins.
Or sometimes they are advised to ‘Not Invest’ and wait for a while longer.
We are Jarvis Invest recommend staying invested without Artificial intelligence which helps you to come up with the ideal portfolio along with customized risk mapping.
To know about Jarvis click here.
How should I plan my investments during such overwhelming situations?
Here’s how to financially prepare during such turmoil.
Emergency Fund
It is recommended to have your salary of at least 3 months of your salary as an emergency.
The emergency fund should be easily liquid and accessible.
One of the best ways to park it is in the liquid mutual funds in the savings account.
Note that this fund is important as it might come in handy if you and your family is caught in a crisis situation, be it from the personal, economical or medical front.
Equity Investments
It is recommended to stay put with Equity investments for the long term.
If you have invested in fundamentally good stocks, there is no reason to worry because these stocks perform after such circumstances pass.
Therefore, it is better to keep this investment undisturbed.
Always remember, if the market continues to be volatile or if your investments go in negative digits, fundamentally good stocks recover in no time and the recovery is in multi-folds.
And if your portfolio has a high weightage for a particular sector, be patient, if the entire affected sector takes a while more to recover followed by your portfolio as a whole.
And it eventually happens in the long term.
Such a crisis situation is a good opportunity to have a look at fundamentally strong businesses.
Therefore, accumulating corpus and then investing in businesses during the time of market takeoff is an ideal way to reward yourself.
If you are a sophisticated investor, you can use your expertise to your advantage by using designing multiple hedging strategies.
However, if you are a naive investor and are sceptical of the situation around you are advised to invest with a professional because initially, it might seem easy and daunting but in the long run, this might affect your mental state and trigger panic selling and unwanted over-trading.
It is better to wait and watch or invest with Jarvis.
If you are considering portfolio investing for the long term here are the rules for you.
Mutual Funds
Volatility is the greatest enemy of your portfolio’s health.
It not only affects investments but also the morale of the investors and is the main trigger for panic selling.
Seasoned investors recommend rupee-cost averaging and thus get benefitted but in a true sense, one must not blindly follow the popular saying “buy at every low”.
If you have chosen to invest there are two schools of thought, Oh! Rather three.
First, make a lump investment and stay put until the market recovers.
Second, if you are sceptical go for Mutual funds.
And third, invest with us, Jarvis Invest!
Click here to understand why investing in Jarvis is a wise choice!
Diversification
In such catastrophic circumstances, it is recommended to buy gold for hedging purposes.
Diversifying your portfolio acts as an inherent shield to protect against losses.
Understand that you make money in the stock market by sticking with the portfolio patiently and with disciplined investing!
Click here to know more about the importance of Diversifying.
Hope you liked the perspectives!
See you next time with the next topic.
Until next time…