The market crash which followed the onset of the COVID-19 crisis would have definitely affected your investments, particularly those in equity. As the benchmark indices are still going down, it is inevitable that your returns may have a negative value at the moment. In such a scenario, checking your portfolio value over and over again will only cause you stress and anxiety, as there is nothing you can do to change how the market is currently behaving. Then, instead of fretting over the uncertainty which occupies the market and the state of your investments, here are some things you can do to be productive during this time, and plan for what lies ahead:

• Reassess your risk profile

If the current situation has left you extremely stressed out and anxious about your investments then you may have to reassess the amount of risk you are willing to take. Furthermore, if the possibility of achieving your short term goals has also been severely affected by the crash, you may have to reconsider your asset allocation strategy. In both these cases, you might have to lower your threshold for taking risks, which in most cases means reducing the percentage of your portfolio allocated towards equity. On the other hand, if the current situation hasn’t affected your life too much, and you aren’t worried about achieving your short term goals, then you are on the right track. It could be that your ability to take on risk is high, or you have optimally allocated your assets (or both). 

• Think about saving and emergency planning

Most times, people think about saving whatever they have left after their expenses. However, the current crisis we are facing reminds us that saving should always precede expenditure. Use this time to chart out a coherent plan to curb your expenses and manage your cash flow well. This is particularly important at a time when your investments may not be doing well. Apart from this the essential nature of emergency planning has also become evident. Consider how you can plan for such contingencies more efficiently. A good lesson in financial planning is to keep aside an amount of 3-6 months expenses, primarily composed of liquid funds, for such emergencies. 

• Articulate your goals clearly

Suppose you haven’t fixed financial objectives or set goals for yourself yet, then you should definitely do it now. Goal planning is extremely important to manage your finances effectively, as it can allow you to decide your asset allocation strategy efficiently. Furthermore, if you have articulated your goals clearly and planned towards them well, you won’t panic when uncertainty kicks in; you would have already accounted for such scenarios in the process of planning. In line with this, keep in mind that you should withdraw from assets exposed to market risks, like equity, at least two years before your goal needs to be achieved. Similarly, for your high priority goals which may be coming up soon, the level of equity exposure shouldn’t be too high either. This will help maintain balance in your outcomes and preserve capital, and mitigate risk associated with market volatility.

So don’t spend your time worrying about your portfolio, and trying to predict things outside your control. Instead, use this time to see how you can prepare for a better future. In this regard, if this is the first time you are undertaking such financial planning activities, think about consulting a financial advisor. Working with a certified and experienced professional has become extremely affordable, and will ensure that you don’t make any costly mistakes. 

“Worry compounds the futility of being trapped on a dead-end street. Thinking opens new avenues.”   – Cullen Hightower