The current situation has caused several people to incur significant losses and indulge in panic buying and selling of their securities and other investments, in a means to mitigate and make up for losses. This is particularly true with respect to the crash in the equities market. So, while the COVID-19 crisis has brought with it large amounts of uncertainty into the market, is it time for you to think about changing your investment strategy? Here’s what you need to know:

A few lessons from history
History tells us that perspective is the most important feature of understanding fluctuations in the market. In this sense, despite the day-to-day volatility that can feel extremely overwhelming, the actual long-run returns of stocks have continued to be quite consistent. In finance, the saying ‘slow and steady wins the race’ has a lot of meaning. The best investors have constantly reiterated that staying the course is one of the most important things to do, even though it can be hard to follow through emotionally. Furthermore, trying to predict the changes caused by the crisis in the short term will be futile but we have always seen that after a calamity, war and even a recession, people and economies have bounced back. 

Are there changes to be made while investing?
The first rule when it comes to investing in equity through mutual funds or an SIP is to do so with a particular goal in mind, oriented towards the long term. Another important point to remember is that making hasty decisions, and buying or selling securities without sufficient information can lead to you losing out considerably when the market turns around. In this scenario, if you are currently making contributions through an SIP you shouldn’t discontinue it. Furthermore, if you are thinking about investing more, do so by deploying a lump sum amount in 4 to 6 tranches, instead of simply topping up existing plans as this can help mitigate your risk. 

The importance of asset allocation
The importance of asset allocation becomes particularly evident at a time like this. Effective financial planning involves allocating assets based on your goals and risk tolerance. By diversifying your investments, you can be assured that you have mitigated risk as far as possible, and this is particularly useful in times like these. Furthermore, maintaining an emergency fund is also essential to helping you get through contingencies like the COVID-19 crisis without having to affect your investments. This is essential to maintain the balance of your asset allocation strategy, since changes can leave you vulnerable. Here, always remember to consult your financial advisor before making changes to any of your investments. Particularly in times of uncertainty, working with a professional is the best way to ensure that you don’t make any mistakes while deciding how to handle your finances. 

While the ongoing events can be extremely daunting, don’t let fear drive you into doing things that you will regret later. Redeeming funds will only ensure that you convert notional losses into actual ones. Trust the fundamentals of finance over your emotions and maintain focus on the long term. Keep these points in mind and you will be able to understand what the implication of these changes in the scenario of investing are for you.