Tips to control your fears in a volatile market by eTrendyStock

Indian stock markets are not responding positively and are volatile inspite of the recent stimulus package series announced by the finance minister. Many of you must be wondering what to do in such a scenario. There is a higher probability that due to the increase in risk investors end up taking wrong decisions based on emotions
which then affect their long-term financial goals. Here are a few tips to deal with such emotions.

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Belief in the markets
As you all understand, the stock market is like a pendulum that swings to both extremes on which investors can have no control. But you do have control over your very own emotions as well as actions. It is tough to make reasonable decisions specifically when markets are unpredictable. The financier requires to be sensible and also positive throughout unstable times as the first dirt is thrown up by the turmoil will settle eventually and the market will recover. We do have empirical and historic proof for the same taking place numerous times in the past.

Rebalance your portfolio
Behavioral finance literary works states that normally investors have the propensity to check out what others are doing when they are not sure of what to do. This is referred to as herd actions. Throughout volatile market times, you hear so many things in the social media sites, from pals and loved ones like ‘everyone is getting out of the marketplace to safeguard their capital’. So should you likewise exit? Avoid leaving the marketplace in a panic as well as reserving a loss. Ideally, to take on herd actions, investors should rebalance their portfolios, seek tax financial savings, and also offered an opportunity to raise the savings percent, and so on.

Consider additional payment on some loans
Another way to deal with uncertainty in the market is that if you have a housing loan or high interest-bearing credit cards, look at the refinancing options which will lower your monthly cash outflows. Generally, interest rates have moved sharply lower during such scenarios. Refinancing is a great opportunity to reduce expenses during the time of economic uncertainty. Seeing great demand for refinancing, some lending institutions may ask for rates higher than that of the market rate. In such a situation, one should shop around and make several enquiries in different places before signing up for a refinancing facility. However, while availing such an arrangement you need to ensure the stability of your income in the forthcoming near period.

Discipline is the key
Let us assume that your long-term financial goal is your post-retirement life which may be still decades ahead. In that case, you should take a long view of the market pullback. It means that instead of panicking and selling your investment when the market declines, choose a mix of investments based on your timeline, goals, financial situation, risk appetite and then stick to that long-term approach. Do not worry much about the temporary fluctuations.

To conclude, if you are still working and saving for the future, a downturn should not be a reason to panic. Instead, it provides you an opportunity to take a re-look at your investment portfolio, and rebalance your portfolio, to reduce your monthly expenses, to boost your savings, and invest according to the prevailing market conditions.