This is a crucial action to be done during volatile markets, and it makes absolute sense to keep calm and ‘do nothing’ amidst the volatile markets. The suggestion to ‘do nothing’ is particularly relevant for making any changes to the existing investment portfolio. 

One should not try stepping out of the markets by redeeming the existing investments out of fear and panic in the volatile markets. 

When investing in equity markets, one must acknowledge volatility as the prime partner in the investment journey. While one may be lucky enough to have a small investment period without any hiccups, the investors must expect volatility to occur sooner or later. While volatility is inevitable, our mindful reaction to such situations is what matters the most.

When the market is volatile, the investors often consider that the market will correct further, and it may be the right time to exit the markets. However, investors tend to lose the opportunity to generate returns when the markets rebound with such actions. One should not attempt to time the markets; instead, aim to spend more time in the markets. 

When the markets are volatile, negative sentiments are moving across different news channels, business newspapers, investor fora, etc. One should stay away from the news, as such negative information discourages investors from investing. 

The media coverage generally tends to go with the flow instead of having a long-term investment horizon. Thus, it is more likely that the media coverage will be pushing negative sentiments on the street during the corrective times. One should always try to stay away from the news and instead trust the investment conviction coming from within. 

While one may not be inclined to stay invested in the markets when the markets are volatile, they may consider discontinuing the SIPs to prevent further capital losses on fresh investments during the market corrections.

However, stopping SIPs during market downtrend may not help the investors, as one effectively stops the opportunity to invest at lower valuations. Such investments may help once the markets rebound/ 

When the markets are volatile, it is indeed advisable that one should continue investing in the markets when the markets are down. This helps the investors to average their cost of investments. This is because one continues to invest irrespective of the market trends. 

One may increase his/ her investments at lower valuations, effectively lowering the overall cost of investments for the investor. One may also consider investing in lumpsum mode during times of volatility, as one is bound to generate better returns once the markets rebound. 

Warren Buffett, one of the greatest investors of all time, once said, “Be greedy when others are fearful, but be fearful when others are greedy.” When the markets are fearful of future market movements, it is time to be greedy and accumulate additional investments at lower valuations. 

When building an investment portfolio, one should try maintaining an optimal asset allocation, which can help one steer effortlessly through different market trends. One should consider allocating a suitable proportion of investments in equity, debt, gold, etc., to maintain diversification across different investment portfolios. 

Further, the historical returns suggest that different asset classes may react differently to similar economic events. For example, an accommodative stance by the Reserve Bank of India post-Covid-19 outbreak helped lower the market yields, thereby impacting the debt valuations favourably. In contrast, equity markets were undergoing heavy correction on the uncertainty brought about by the pandemic outbreak. With an investment portfolio spread across equity and debt, the returns would have got balanced.