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What an Investor needs to know when markets hit a new low

In these unsettling times, knowledge, patience and endurance are the things that will keep your money safe. Find out, what you; as an investor, needs to know and do when markets are crashing and otherwise, here.

How does one deal with murky market fluctuations?

By the one way the wise have always taught us.

Through acceptance.

Accept the uncertainty of the times. Trying to predict market directions at this time is futile.

How must i deal with my investments ?

Just hang in there !

If you are dealing with SIPs, continue investing. This is when you are buying at a cheaper prices; especially when it comes to Mutual Funds or SIPs.

Can i invest huge funds in the markets when it has crashed ?

This is never advised.

Always invest in parts. Always be certain of your goal. Ask questions like how much fund do you have, how much are you willing to invest now, what is your risk taking ability, how long can you invest, when do you want your money back.

If your time period is limited; say a year or less, then do not contemplate putting your money here.

Only invest if you are looking at things through a long term lens. Wealth creation is for the committed and requires you to take the long haul.

DO NOT rely on the stock market recovery for your short term goals.

What to look for when Investing

Asset Allocation– While investing do not look for higher growth funds. Always find the middle ground for a balanced investment.

Invest a certain portion based on your risk profile and a certain portion in equity.

So allocate funds in asset classes based on your risk appetite.

Goal based investment Always know your purpose of investing. If you have none, go forth and create one. Take time out to define your goals. Do this and you will be paid back handsomely, eventually.

And based on this clearly envisioned goal, you will know what asset class is right for you.


This is the time to invest based on one’s knowledge. If not, take professional aid. Look for a financial advisor who is qualified; who can probe into your needs, your risk capacity, your investment time frame, the surplus amount you are willing to invest and eventually suggest the area of investment catering your needs.

What to stay away from

With the many advertisements offering unsolicited advice on how to handle money during a market crash, do not fall prey into making investment decisions based on this.

Always study thoroughly or seek help of a qualified financial advisor for the same.

What must your checklist contain?

Check if you have an emergency fund, if you have made arrangements for any short term investments. Check and invest safely in options like debt fund, fixed deposits etc. and not in equity in these volatile times; which will require you to take risks.

Also, check if you have insurances– like term insurance, medical insurance etc.

It is also not the right time to buy loans once the market has crashed.


Financial discipline is your responsibility. This is what you owe your money. Always take advice before investing.

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What Is Insurance

The life and property of a person is laden with risks of death and disability.

Insurance is transferring this risk to an insurance company.

Most people mistake insurance as an investment  which is not the case. It is a protection against contingencies such as the death of the policy holder or damage of his property. In return for the premium paid, the insurance company promises to cover the losses for the property or life of the insured.

The purpose of the whole process is to ensure the affected family does not face any financial hurdles in case of unexpected occurrences.

Let us take the example of motor insurance. The reason for taking motor insurance is to provide financial protection against damage to your vehicle as a result of an accident or a collision. In case of accidents, insurance companies are expected to provide the amount required to repair the vehicle.

The same is the case with life insurance.

Two Important Reasons for taking Insurance

There are two important reasons why someone needs insurance – Life cover and medical emergency.

Life Cover

The life of insured is covered in insurance. In case any mishap occurs to the insured, the affected family gets a lump sum amount so that they do not face any financial hurdles.

Let us assume the sole breadwinner of a family passes away. If a financial emergency arises at this point, this insurance amount will help the affected family survive the urgent requirements.

Medical Emergency

The medical requirements of an individual are covered in medical insurance. During a medical emergency, the insurance companies are expected to provide the fund needed for the treatment based on the sum assured.

Most people take insurance as part of tax planning. People jump into it without proper study which results in ending up in policies which are not suitable. One must consider their life risks or the sum assured before taking a policy.

Insurance as said above is a protection against one’s life and property. So assess the life risks and choose a policy based on your requirements.

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Emergency Fund

It can be a major repair to your house, a broken bone or a layoff- when facing such crisis; you will be able to manage if you’ve had an emergency fund.

Emergency fund is a safety net or a readily available form of assets in the form of liquid fund to withstand an emergency that may occur in your life. It is a foundation stone in which you start your journey towards financial freedom.

When a job change or a forced break or a medical emergency occurs, it will disrupt the income flow bringing a sudden change in lifestyle. In such scenario, in order to meet the monthly expenses, emergency fund in liquid form must be available so that house hold management doesn’t get affected.

How can one build an Emergency fund ?

The safest way to creating emergency funds by saving money required for monthly expenses for one year in savings account.

If you find it practically impossible, money required for at least three months of monthly expenses must be there in savings account in liquid form. If the emergency fund is for three months, it can be created in savings account. If it is for nine months or a year, the fund for three months can be created in savings account while the rest of the funds can be invested in FD liquid fund.

Still sceptical about emergency fund?

Many find it difficult to withdraw invested funds when the emergency arises due to many underlying situations.

If you have invested in equity or stocks, unfavourable market conditions may stand as a hindrance.

In the case of FD, most banks will have a lock in period which makes sudden withdrawal all the more difficult.

If it is in gold that you have invested, any depreciation in its value might make matters difficult.

In short, if you have an emergency fund, it helps you prepare for any mishaps or criticalities that may hit your life.

Even those who are taking baby steps in investing must create an emergency fund to survive unexpected events.