No, never! Come on answer one question, will you buy a T-shirt at MRP or discounted rates?
Why do you want to buy clothes, shoes, and even groceries at discounted rates but not stock and mutual funds. This is hard to understand. Here also you just need to be cautious not to buy bad stuff at a discount. That’s it.
The CRISIS/ CORRECTION of the market is temporary in India, but the growth is permanent.
First, let us understand the situation in which we are, is whether CRISIS or CORRECTION?
A CRISIS in the market is officially defined as a period where the fall in prices is measured via a suitable benchmark index, which has been at least 20% from the recent peak. Nifty 50 saw its peak in mid-January 2020, at a value of around 12400; at its current value of around 9200, this is slightly more than 25% fall from peak. Therefore, this is the time of CRISIS. This indicates that a fall in price is going to continue for a while in the market.
And, this is not the first time that market is going through CRISIS. Between April 1992 and August 1992 Nifty 50 took a dig of 45%. Then it bounced back 35% within two months and again proceeded to fall 37% till April 1993. Then followed the next one-year Nifty doubled and showed structural growth.
In the last 3 decades Market has gone through many CRISIS, some have lasted longer, some came just to do corrections but every time market bounced back and became normal.
Have a look at this table –
So, now you know what is happening right now is a normal situation and instead of panicking one must hold patience and wait for the situation to settle down.
What you must not do?
- You must not withdraw from your equity investment but if there is a financial urgency deduct only the amount that you need to leave the rest.
- CONTINUE YOUR REGULAR INVESTMENT, as this is the only way to take advantage of lower prices. If you stop now and continue aftermarket gets up then you miss at low prices. Investing now will help you add more units of Mutual Fund assets to your portfolio. More the units, the more return you will receive once the market regains itself.
Keep reminding yourself that market volatility is just a part of the market investment. And in the long run, it happens you cannot control it. And you cannot predict till when the market will be low so don’t waste energy on doing that. Rather use it as an opportunity to buy more units.
Also, the long run in equity means many years; the longer you stay invested the better it is.
Markets are available at a discounted price, so it is super important for you to continue your SIP, to get more units and for better returns in the future.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).