What Should You Do When the Market Falls?

How do you feel when the market falls? Do you get worried of losing money? scared? worried?

So let me make this a little better for you. Most of investors worry when the market falls, and they think of selling stocks or redeeming Mutual Funds. But the smart investor does the exact opposite and in fact purchases the funds or stocks when the market is low hence, he gets the benefit of buying units or shares at a lower price. And when market is Bullish or rises back he has make more profit compared to what he would usually make if the market did not fall.

Does this interest you or make sense?

Now I want to tell you about the Rupee cost average.

This is specifically for SIPs Systematic Investment Plans.

1. What is rupee cost averaging?

To be able to earn high returns from the market it’s important that you buy low and sell high.

The investment strategy that is deployed to overcome the challenge of timing the market is rupee cost averaging, a concept also employed by mutual fund systematic investment (SIPs).

Putting in a fixed amount when the market falls, you end up buying more number of units, and when the market rises, you buy fewer units. Over time, the purchase price or cost of buying mutual fund units averages out, which is referred to as rupee cost averaging, Consistent investment over long periods means that the cost of purchasing reduces, increasing your gains.

2.   How does it work?

         Benefits:-

1. Tackles Volatillity- It, helps deal with market volatility because a fixed amount is invested regularly, irrespective of the market highs and lows.

2. Avoids timing:- One doesn’t need to time the market, looking for lows and highs, as the money is invested regularly.

3. Reduces Cost :- Over a longer investing time frame, the cost of units comes down, increasing the gains.

4. Ease of investing:- investors can choose the amount they are comfortable with instead of putting in a lump sum.

5. Discipline :- It rules out impulsive exit and entry, and inculcates disciplined investing for the longer term.

Hope you were able to understand what you should do when the market falls. For more clarification and to get your financial planning done, you can book a call with the link in the bio

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Suman Manjrekar

Infinite Wealth Coach

7 CRUCIAL PERSONAL FINANCE LESSONS

 

7 CRUCIAL PERSONAL FINANCE LESSONS  that I learned from my life.

Save this for future reference:-

1. Buy to impress = Less Money: Spending money to show people how much money you have is the fastest way to have less money. When you realize you don't need other's approval, You start saving more money and focus on what truly matters- your wealth-building and financial success.
2. Average Friends = average life: We are the average of the five people we spend the most time with. We get inspired by the people around us and when we see them growing financially we get out of our comfort zone to grow like them.
3. Marrying in money: Marrying someone with similar financial goals and values is essential. It is very difficult for a married couple to accumulate wealth if one is a spendthrift. A household divided in its financial orientation is unlikely to accumulate significant wealth.
4. Investing = Long : Setting long- term financial objectives has been transformative for me. Instead of focusing on short- term gains. I have learned to invest in my future by contributing to retirement accounts, saving for emergencies, and building cash-flowing. If you are starting to build your investment portfolio, focus on where it will be in the while compounding returns.
5. Cash is King: Life is unpredictable. Research shows that having an emergency fund covering 3-6 months of living expenses can be a financial lifesaver. Without this cushion, You are one emergency away from a financial disaster, which could lead you into a cycle of debt.
6. Money buys freedom: The greatest purchase money can buy is freedom. Freedom to choose not to work, to control your time or to live life the way you want.
7. Financial literacy = Wealth: In a world of financial Pitfalls, being financially literate is your best defense against scams and bad investments. Being economically savvy equips you with the tools to make informed decisions, safeguard your money, and ensure a more secure financial future.

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