The COVID-19 outbreak has had a major impact on investors' wealth as well as their investment attitudes and habits. While some see it as an opportunity to invest, others are driven by the fear of losing more money and are withdrawing from the market. In these circumstances, Ankur Choudhary, Co-Founder, Chief Investment Officer, Goalwise, shares his insights into investment strategies in times of novel coronavirus.
Market crashes are inevitable - only the reasons are different each time. Moreover, when will a crash happen, how deep will it be and how long will it take for the markets to recover are also unknowable in advance. Even during good times, all investments must be made keeping this unknowability in mind. As they say, the best time to prepare for war is during peace. The fundamentals of investing remain the same even today.
For short-term investments, use liquid or overnight debt mutual funds. For medium-term and long term investments, invest in a mix of Equity and Debt Mutual Funds as per your risk profile. Lower the risk profile, lower the allocation to equity should be. If you are unsure of your risk profile, err on the conservative side as we generally overestimate our risk tolerance.
For investors who have been investing regularly, do not stop your SIPs. You can decrease them if your income has been impacted (e.g. pay-cuts) but do not stop them altogether. Investments made today will yield the highest returns in your portfolio in the long term. Do not make any big changes to your portfolio impulsively. Consult your financial advisor if you have one.