The Sensex has fallen from 41,952 to 25,981. Almost 40% fall!!!
Are you worried about the stock market levels? The crashes in the stock market? Your investments?
Let’s get things into perspective. Let’s not get confused by the mess around. Let’s PRIORITISE.
Table of Contents
- You and Your family’s health
- Never think your job is safe
- Your most important financial goal
- Increase your Emergency funds
- Continue your regular equity investments
- Additional Equity Investment
What is to be prioritized before your reaction to the stock market crash? Let’s see.
You and Your family’s health
Life, of course.
Yes, this is the first and foremost thing to look at, you and your family’s health. As there is a widespread of coronavirus, you should stay indoors and take good care of your family. This should be your first preference before money. Predicting whether you are safe or not is difficult unless you take necessary precautions.
Never think your job is safe
Think your job is safe?
With the impact corona has all over the World, never think that your job is safe and that you will be paid regularly. Only to a certain extent, your company may do this, if it goes beyond control, they may not be able to help.
Your most important financial goal
What do you think is the most important financial goal right now?
Considering the present risk, liquidity and emergency funds are the most required now. Whenever there is a requirement either for your family or friends or relatives, it can be used.
Increase your Emergency funds
Should you increase your Emergency funds?
Yes, many of you would be having 3-6 months of your monthly expense equivalent money as an emergency fund. With this epidemic, you should increase your emergency funds beyond this as we don’t know when this will be back to normal. Hence start increasing your emergency funds rather than withdrawing it and investing in equity, just because the market is down.
Continue your regular equity investments
Is it good to continue regular equity investments?
Yes, if you are investing through SIP, then continue as usual. If you stop your SIP now, then the whole purpose of SIP will be lost. If you come out of your SIP now, then rupee cost averaging will not happen. Don’t disturb your SIP for now. If possible and feasible increase your SIP contribution to take advantage of the market crash.
Additional Equity Investment
Are you thinking of investing more money in the stock market now?
If you have any additional money (excess or surplus) which you may not need for the next 7 years, then you can invest that long term money in the stock market. This stock market crash will be a good opportunity for you if you have got fresh long-term money. The stock market is available for you at discounted rates.
You need not invest this fresh long-term money in equity at one go. You can invest it in a staggered manner. You can spread your investments through SIP for 3 to 6 months.
So start with looking after your health and your family’s health. Never think your job is safe. Continue your equity regular investments as usual. Your main financial planning goal should be on emergency funds and liquidity. Hence increase them to a comfortable level. Lastly, if you have any additional long-term money you can invest them in a staggered way in the stock market, rather than investing as a lump sum.