Are you trying to create a killer investment portfolio? Trading is an overwhelming and puzzling process. No matter how tempting it seems to be, let's face the reality. There is no secret success mantra when it comes to investing in market. You can earn a profit only when you understand the market well and trade the right stock.
You invest in stocks to achieve your financial goals and earn a profit on your savings. You try to make money work for you rather than working for it. But, it's not that simple though! Investors often make major mistakes while trading. The biggest mistake is not keeping calm when the market is volatile which is temporary only. This article will talk about what not to do when the market is not how you expect it to be.
Normalize Stock Market Volatility
Investing in stocks is quite a risky business. While it has the potentiality to provide high returns, it is also very volatile. The price of a stock might be high on a certain day and might drop the very next day. But this is a common thing when you are investing in stocks. The volatility is short-lived and if your vision was right while investing, your stock price will rise up soon.
How Does A Volatile Market Affect The Investors?
The fear caused by a volatile market makes different investors react differently. Some of them panic as their investments are going downhill and try to sell and end the trade. Such hasty decisions often end up bringing terrible outcomes.
Things Not To Do When The Stock Market Is Volatile
Don't Start Panicking
Panicking and speculating are the first things most investors do during an unstable time. No matter how much you freak out, never get influenced by fear. Or else, you might panic-sell the stock way too irrationally without considering your long-term goals.
What To Do Instead?
Remember why did you invest in the first place? If the fundamental values of why you bought the stock is clear, then trust on your investment. A volatile market is temporary. Focus on your long-term goals and be patient. But if you don't have enough clarity on your goals, selling it might be the only option you have.
Don't Close Your SIPs
No matter what you do when the market is volatile, don't cancel on your SIPs in mutual funds. By closing it you will lose compounding benefit of equities.
What To Do Instead?
Stick to your SIPs, when the market will rebound, you will be buying more units at a lower price. Equity bonds mostly provide great returns in the long run.
Don't Believe Whatever The News Broadcasts
As an enthusiastic investor, you might watch stock news every day. Don't get carried away by a sudden 'breaking news' update that might lead you to make the wrong move. Every news report is not always authentic.
What To Do Instead?
Remember, news updates about the volatile market can be short-lived. Such temporary volatility happens because of the current stage of the economy. You must be aware of all the news updates but you don't have to act on it every time.
Conclusion
Keep the above-mentioned things in mind when the stock market is volatile. Remembering why you invested in the first place will help you face the low waves like this. Have you experienced such downfalls before? What do you do is such circumstances? Let us know in the comment sections.