Financial planner: Ashish Modani, Founder, SLA Financial Solutions, a wealth management firm, based in Jaipur.
Questions asked by his clients:
1. We have lost money. What should we do?
2. Should we stop investing in equity and move to safer funds?
3. How long will it take to get back our returns?
Many investors are worried, and legitimately so. They have lost lakhs of rupees in their portfolios. However, I do not recommend any action at this point. I have always told my clients to be ready for such falls, but many take their risk appetite for granted. If you understand that you shouldn’t be invested in equity schemes, stop putting more money. However, I don’t recommend selling investments at this point.
It is a bad idea to consider moving to safer funds. The idea of safety is relative. If you want to move to debt when equity falls and move back when markets go up, you will keep juggling your investments forever.
If you can’t see your portfolio dipping 30 to 40%, you should not expect your portfolio to go up 3 to 4 times. Whether it is Coronavirus pandemic or GST or or dollar crisis, one can only make money by sticking to the market through various ups and downs.
There is no timeline on when the markets are going to stabilize. We don’t know when it will come to the levels you want. The only thing that you can and should do right now is to maintain a proper asset allocation. Don’t sell anything or buy anything which is not in line with your investment strategy and asset allocation. Don’t be driven by panic.
Your patience will be tested, but you don’t need to turn your notional losses to actual losses.