INVESTING IN UNCERTAIN TIMES

Stock market crashes can put even the most confident of investors on edge. In 2020, the Indian stock markets witnessed a near 40 per cent fall, and then recovered. This year, we have witnessed a 10 per cent fall since the beginning of the year, which recovered only to fall again. Add to this market uncertainty, rising inflation and loan interest rates, and it is becoming more and more tough to stomach the wild market swings in your investment portfolio’s value.

For scores of investors, when the stock markets are on the rise, there is little convincing needed to stay invested, but when the markets witness falls, investors get into a frenzy. Several seasoned investors have learnt the hard lesson of reacting in such situations—one must stay calm and avoid making emotional decisions.

But, that is easier said than done for first-time investors, who are yet to understand that how markets move is largely out of our control. It is important to control our reaction to volatility. While it is understandable to be anxious, it is essential to not let emotions dictate your investment decisions.

Over the past few decades, stock market swings have only been on the rise, and caused by seemingly unrelated events, such as wars, a pandemic or financial crisis. But a careful analysis can be educative for investors in making them understand the true meaning of risk.

To add to these anxieties, there are several myths circulating about stock markets that can confuse and create