Let me start with an old fable.
King Solomon once searched for a cure against depression. He assembled his wise men together to find him a cure. They meditated for a long time and gave him the following advice: Make yourself a ring and have thereon engraved the words ‘This too will pass.’
This is our story also. In the last 20 years or so we have seen 3 bubbles (DotCom bubble of 2001, Financial Crisis of 2008, and this one). Each of these bubbles had no precedence and at each time we felt that things would never be fine again, but we came back as markets and economy bounced back.
This means that periods like these are a great opportunity to think and prepare for the coming better phase. Here are some tips which you can use during these times.
1. Don’t look at what levels markets are at or your portfolio every couple of hours. (One hack is that on Chrome block the site which you use to look for prices)
2. Since the majority of us are WFH, this is a great time to think about the missing pieces of our financial lives. Some of the things which you can look at are:
- Emergency Funds
- Tax Optimisation
- Asset allocation
- Term Insurance & Health Insurance
- Optimising your credit card & loans
3. Don’t listen to dumb advice of continuing your SIP. These are valid only if certain conditions are met which obviously that mutual fund selling apps, banks distributors will not tell you.
4. Don’t fall into trap of Goal Base Planning. The only goal in life is to create wealth. It is wealth which determines Goals and not otherwise as sold by many. And to create wealth you need to buy at the right time and sell at the right time.
5. Finally, if you are not sure of what to do please feel to ping us anytime here and we will try to help you as much as possible.
So, be calm and be prepared to ensure that when the economy and markets come back, you will also come back with it by maximising gains.