The spread of the novel coronavirus, COVID-19, and the decline in international crude oil prices has led to a significant downtrend in the market; causing immense fluctuation in the equities and debt market particularly. This chaos can be even more unsettling, if you are a new investor and saw steep declines in the valuation of the equity mutual fund units you have purchased. However, the ongoing slump in the prices of your holdings shouldn’t be taken as a harbinger of doom for your investments, and the goals they were leading to. Instead, here’s what you can do as an investor in equity funds, to ensure that you make your way out of this current scenario optimally; and remain on track to achieve your goals as planned.

• Don’t panic and make hasty decisions:
  The first thing you need to do is stay calm, try not to crack under the pressure of the moment and continue to make informed decisions. Don’t indulge in panic selling as an attempt to mitigate damages. This may actually cause you to incur significant losses when the market starts to do better. So while it sounds odd, the best thing for you to do is to remain patient and get your existing holdings reviewed by a financial advisor  to prevent further damage. This can be extremely difficult owing to the uncertainty around how long this market crash will prolong, and the fact that you may feel the urge to unload your poorly performing assets. But don’t lose hope, the markets do recover in the long run!
• Invest through an SIP:
  During these periods, making contributions through systematic investment (SIP) is suggested because it will help balance investments, while you can benefit from rupee-cost-averaging. Investing through an SIP during downtrends in the market can be critical when it comes to delivering solid returns, as you can acquire more units during the slump period, and benefit from these purchases when the market gains momentum. Instead of topping up your existing plan, most experts suggest deploying a lump sum amount in 4 to 6 tranches, owing to the manner in which the current crash has been progressing.
• Create liquidity for near term requirements:
  As we mention about incremental investment through staggered manner, we want to emphasise on creating liquidity for all requirements and goals upto 6 months. Do not use your emergency liquid fund to deploy into markets. If the emergency corpus seems insufficient for all 4-6 months requirement redeem money from the weaker or riskier  portion of your portfolio.
• Make purchases aimed at the long-term:
  With respect to investing in a market crash, the best thing to do till a time when the economy shows signs of improvement is to make plans with a long-term perspective. In this regard you can consider index funds, since they are known to be extremely low-risk and hence suitable for both new and seasoned investors. By using these opportunities together with actively-managed funds, you can build a strong portfolio oriented towards getting substantial returns in the long-term. However, as long-term planning can become quite complex, it is extremely important that you consult your financial advisor before making any decisions.