Stock markets globally witnessed significant downturn in March 2020 due to the ongoing pandemic COVID-19 crisis majorly followed by the oil price war between Russia and the OPEC countries led by Saudi Arabia. Nationwide lockdowns internationally have not helped the situation as active coronavirus cases are increasing every day. However, this is not the first time that equity markets have faced steep correction and neither will it be the last. Such uncertain periods can be extremely stressful – especially for new investors. Below are some points that an investor can imbibe to prepare for the days ahead. Panicking in such times disrupts both mental and financial health. 

• Prepare for income irregularities

In the event of a recession, it is obvious that you will face disruptions in your income. If you are an employee, the possibility of a layoff is a real threat as companies will be trying to reduce costs. Also, if you are a business owner, you may already be experiencing a decline in revenue due to the mandated shutdowns.
To tackle and sustain through income irregularities, the best thing to do is create a substantial cash reserve to meet expenses for the coming few months. Such planning will give some time to rethink over your finances to meet future requirements. 

• Gear in for the long term

It is essential that you don’t let the ambiguity of the present situation deter your focus of the long term. Remember, panic selling can lead you to incur significant losses as the market starts to revive.. The best thing for you to do is to remain patient and maintain your existing asset allocation. 

• Anticipate and mitigate losses

It is very likely that large majority of investors will be in a scenario where they are facing or faced losses in their portfolios. In this case, it is not how much you lose, but how well you protect further loss.

1. Build cash reserves to participate in equity: There isn’t much that can be done regarding the losses you have already sustained in your portfolio from the crash itself. The best thing is to reduce those losses by building cash reserves to purchase stocks  at low prices. The most ideal way to do this is to stagger such purchases over a longer period of time, instead of making one lump sum purchase. This process will help an investor to buy at various price levels across different market cycles and average their purchase cost. 
2. Rebalance your portfolio: Such market correction paves out an opportunity to rebalance and clean up your portfolio. Investments or stocks that are underperforming or are under stress can be exited. Entering into markets in a staggered approach will help to reap the gains of the market over the long term. 

A market crash can be extremely stressful, owing to the uncertainty regarding the future of your investments. This is particularly true for new investors who may not have experienced such a scenario previously. Since it is difficult to predict the bottom in equity markets, as seen historically revival instances have turned the markets to positives gradually. The best practice to tide through this pandemic crisis situation is to stay invested, avoid panic sell, remain patient and stick to asset allocation.