Why one should keep investing with discipline in the market despite a downfall

The stock market has always been unpredictable due to many reasons, making investors anxious and jittery. It is often during a sliding market when investors make ill-advised moves. And end up paying a heavy price. Here are a few common mistakes that investors should avoid in this situation.

During economic downturns it is often observed that investors hurriedly start selling all their stocks and retract investments in panic. However, one should keep in mind that while investing in new stocks might be risky especially in cyclical companies, regular investments in your pre-existing financial assets should not stop in an economic downfall. For example, mutual funds, non-cyclical company stocks, bonds etc.

In a bear market, investors often make mistakes and end up paying a price for it later. Remember, that when there is a downfall, an upturn is also not too far behind.

When the investment goal is Long Term Benefit, one should keep the eye on the prize and keep investing religiously. Yes, for short term quick schemes the same cannot be said as the benefits may come later than expected as interest rates fall. Many high performing assets can be bought at a very low rate during these times and can be kept until the prices soar again giving you the opportunity to make profits on that purchase. However, these purchases need to be made after ample amount of research about that stock i.e why the price has fallen, the highest price the stock has touched in the past and if the future rate can be anchored to that expectation. Don’t buy company stocks with inherent flaws such as corporate governance issues, lack of earnings visibility etc.

As far as pre-existing investments are concerned, your premature departure from a scheme will result you in losing all your precious investments without even getting a good rate of return. The secret to a successful investor's profits is that they don’t stop investing during a downfall and reap the benefits of a booming market later on. With so many multinational companies shifting their base to India, it is sure to bring a big amount of international investments to the country and boost the market here. So keep in mind all these points before you make a decision.

A thorough research, financial advice from professionals and self discipline during this time is key to assure you profits in the long term. Don’t make rash decisions - stay diligent, stick to your carefully devised financial road-map and don’t lose patience.

For consultation and to get assistance on your financial portfolio, contact Investoscope Financials.