If you are a stock investor, either direct equity or through mutual fund, you must be watching markets almost everyday or may be several times in a day, discussing with your acquittances and feeling either the FEAR because its too high to believe, GREED to somehow get in and encash on the unstoppable run, feeling LEFT OUT if you chose to stay out because fall was too steep and you did not anticipate such a sharp recovery without significant improvement in fundamentals of economy or best just HAPPY because you choose to weather the storm and stay invested and made not just smart recovery but some gains as well.

 

Whichever position you are in, there is need to go to fundamental rules of investing; and not as reaction to current situation but as core basics of market investing:

 

  1. Always get your Risk Profiling done; its not just about your financial strengths, but also takes into account your age, assets, liabilities – current and future and stability of income.
  2. Follow your Asset Allocation matrix, drawn on basis of your risk profile; any knee jerk reaction based on sudden change in markets is never a recommended action. Markets are always volatile and fundamental rule is – markets do not perpetually either go up or come down, over long-term equities provide superior returns and short-term abrasions get ironed out.
  3. Follow a goal-based investing and bucketize your investments based on your life goals.
  4. Always maintain adequate emergency funds.
  5. Ensure you have adequate Term and Health Insurance, take professional advice if you need to be sure.

 

Experts believe if you follow some of these simple rules, over long period of time you will come out winner and probably will never have to worry about short term abrasions, either because of emergencies or risks that are integral part of any wealth creation process.

 

In conclusion, if you have stayed with your investments, have a check done if there is need for any rebalancing because of changed circumstances. If you are feeling felt out, don’t worry, first get your financial plan in place and follow the rules, don’t be in a hurry to get into the market, get professional help. And to end, Greed and Fear are not positive emotions and do not require to be reacted to in hurry, manage these well, these have no place in wealth creation journey. Happy Investing.