What should an investor do as the market turns volatile?

The market is extremely volatile right now, so how should an investor handle the situation?
- Naveen Kaura

Markets are volatile now, they have been volatile before, and they will be volatile in the future. They are like that only, and in the future, they may become even more volatile because that has been an increasing trend in the last five-ten years.

But one can deal with market volatility by having two-three things placed nicely. One is to have a sufficient emergency corpus so that you are not dependent on the market for any immediate or short-term need. Also, ensure that your life insurance and health insurance needs have been taken care of. They are very important. At last, make sure the money you are investing is not required before five to seven years.

If all these basic things are taken care of, and you invest regularly, then market volatility can be turned into an advantage. So, if you're a regular investor and in the accumulation phase, you should feel happy when the market goes down because you are buying cheaper. But that doesn't happen, and we behave differently. The impact and scale of media consumption make us behave in a different manner. We get pessimistic or optimistic very quickly. And that shows in our behaviour.

I remember, 20 years back, I had put an embargo on watching CNBC during lunchtime in my office. I thought it was a great distraction. Many people have this poor notion of being an 'insider' by watching CNBC. And now, it has become a thing of the past. A lot of social media and telegram channels now do the same thing. But it is simply a distraction. As per the law of the land, a company revealing anything meaningful must do it first on the stock exchange than any other medium. So the news is already revealed before being announced on these channels.

This article was originally published on April 05, 2022.