It is amazing to see how much of interest there is in investing moneys when the Stock market is doing well and is trading at a premium. However ever since covid 19 struck, we have seen that the stock markets in India have corrected by almost 30 %... with that almost all of investors have either deferred their investments altogether or have stopped/ pruned their regular investing.
Inspite of the markets being at a low, why does this happen ?
Fear factor is on top of the investor's mind, as they have seen erosion in their portfolio values, so they fear that their current investments too would suffer the same fate ;
With the Lockdown being extended, the economy suffers and therefore enterprises that make up that economy also go through financial pain, be it debt defaults or companies with high debt going bust all possibilities increase, thus the investor prefer the sanctuary of safe savings account than actively engage in investments ;
Uncertainty on their short term monetary needs including prospect of pay cuts, job loss etc… also forces people to defer making investment decisions ;
How should investors proceed in these uncertain times ?
Plan for the next 12 months cashflows in the form of a cash budget, in the event of a business loss or job loss or pay cut, how are you going to meet the living expenses ;
Review your medical insurance cover and look at Topping it up if possible and also your life insurance cover, Covid times have shown how fragile life is and it needs to be protected financially as well ;
Revisit your existing investments and review them thoroughly as post COVID the new normal means that investments will need to be refocused, if not take time to get it done, if you need help of a financial advisor (FA) to provide objective direction reach out to your FA ;
These are great times to super charge your investments as the markets are atleast 25 % cheaper ( Esp the equity investments) and this discount will disappear once the uncertainty relating to covid is behind us, so make the most of it by pumping in more into your investments and rebalance your portfolio.
After all with all the lockdown, your savings rate is significantly up as against the normal times, what are you doing with it ?
So it may appear to us that there is nothing positive happening in the economy , but these are the best times to keep going with your investments regularly ( with a bit more care),but going about it consistently will make all the difference in terms of how you are able to build your long term wealth.
So as they say, WHEN THERE IS NO WIND, YOU ROW.. for that the only way to reach your destination.