Be greedy when people are fearful and fearful when people are greedy. We’ve all heard this or some version thereof in the context of investing. However, as fear mounts due to COVID-19, many are wondering how to invest during this pandemic.
Some are even wondering if they should invest at all. I always say “Keep Calm & Cube It” but, there’s more to it than just that. There are a lot of factors we have to weigh when investing in times of uncertainty.
It takes courage and discipline to be a smart investor. The markets have proven year after year that while such global events have a short-term impact, in the long term patience always wins. Just open your browser and type “SENSEX” or “DOW” in the search bar.
You’ll see a simple graph of the market. If you look at the Dow Jones Index since its inception in 1896 or even the SENSEX, you’ll see that the market has always recovered historically.
The only people who lose are those who try to time the market. I’ve learned a little about investing thanks to my work as the Founder of Cube Wealth. Here are some tips I’d like to share with anyone grappling with how to invest during a recession, pandemic or whichever economic fears that are keeping you up at night.
Be Disciplined With Your SIPs
Over the next 3-6 months, it’s crucial to stay on track with your SIPs. Do not stop them. This avoids all kinds of bad behaviour around market timing that we succumb to out of fear or greed. Stay the course and avoid taking any big decisions – don’t give in to urges and remember why you had a plan in the first place.
Be Smart & Aggressive If You Have Cash
Lucky you. If you’re itching to take action on some cash think of an add-money to an asset managed by a proven fund manager. However, have a plan that spreads across over the next 2-3 months if you are aggressive. This is the period where you have a chance to balance out your investments and benefit from rupee-cost averaging that SIPs are known for.
Build The Perfect Portfolio
One must always focus on four key elements when investing. First, you must build an emergency fund. Think of this as setting aside 3 to 6 months of living expenses. You could keep this money in your bank or liquid funds. Once this is taken care of, think of investing for short term goals like a wedding or saving up for higher-education.
You can do this by investing in any short-term asset that doesn’t risk your core amount. For example, on the Cube Wealth App, we offer everything from P2P lending to advisor-screened debt funds. You can follow this up with investing for expenses you can foresee over the next 3 to 5 years.
This is where your ELSS, India mutual funds and International mutual funds come into play. You can pick either moderate risk or aggressive based on your personal risk appetite. Neither one is wrong or right. Then, it’s big picture time – invest for long term goals like retirement that are at least 7 plus years away.
You can go for a concentrated stock portfolio here – but only under the guidance of a fabulously proven advisor – not based on tips. A balanced portfolio like this will help you sail through to the other side with a big smile on your face.
The last and perhaps the most crucial tip I have to share is this – work with people who live and breathe investments. You need high-quality financial advisors with a proven 10 year plus track record who can point you towards the right assets for you.
You wouldn’t let a dentist perform a by-pass – you know you need a cardiac surgeon. The same way, your investments need to be based on a combination of data and human experience.
Talk to a wealth coach who understands your financial situation, can review your portfolio and work with you through the highs, the lows and point you to these quality advisors and assets.
Founder & CEO of Cube Wealth, Satyen is a Stanford Alum in computer science, HCI, and tech entrepreneurship. He spent 15 years in Silicon Valley learning his craft with Apple and Frog Design. He then embarked upon his own startup journey in the US & India. He is also the founder of Citrus Pay – India’s first digital payment gateway. A successful venture that sold for USD$130M in 2016. Now, Satyen is simplifying wealth creation for busy professionals with Cube Wealth, the Financial Freedom App with a smart Perfect Portfolio Planner feature.
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on stock picking, poring over excel sheets, financial news, analyzing market trends, tracking the Sensex, researching company fundamentals, comparing mutual funds, reading financial reports, trying to predict the future & losing your sanity!