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.


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


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


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


  1. 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

Whats your view on this please share in comments, and  feel free to share this in spreading awareness.

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Suman Manjrekar

Infinite Wealth Coach

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