Are you worried when markets crash? Thinking of stopping your SIP? Wait! Read this before you decide.
Building strong investments means not just saving money, but also learning how to invest even when markets are down. In fact, some of the best investment opportunities arise when others are thinking of stopping their investments due to a market fall – that’s when you should be greedy when others are fearful. It is very important to stay invested when the market is not performing well — that’s when smart investment decisions are made.
Why You Should Not Panic When Market Falls?
It is normal to panic and stop ongoing SIPs when stock market crashes. But this is a mistake.
👉 Rupee cost averaging is the essential idea behind SIPs.
👉 When markets fall, the NAV (Net Asset Value) of mutual funds becomes more affordable for long-term investors.
👉 So, when you continue to invest through SIP during a market fall, you buy more units at a lower price and benefit from rupee cost averaging.
👉 Later, when markets recover, these unit will grow and provide much better returns.
So, when the stock market falls, make the best use of this opportunity to invest smartly, which will provide good long term returns.
What Data Says About Market Recovery?
A study conducted by Baroda BNP Paribas AMC shows:
✅ In the last 20 years, Nifty 50 fell more than 10% on 13 occasions.
✅ After the fall, in 11 out of 13 cases, the market gave positive returns within a year’s time.
✅ In around 9 cases, market returns were in double digits.
✅ The average return was somewhere around 21%.
✅ If you had stayed invested for 3 years, it would have felt like there was never a loss.
💡 Lesson: If you stay invested for the long term and remain consistent with your investment practices, you are more likely to gain when markets bounce back. But if you panic and sell, you lock in definite losses because the markets are already down and you are cashing in those losses.
How to Manage Investments When Markets Are Volatile?
When markets are volatile it is time to look at your investments and make smart decisions to invest more by leveraging rupee cost averaging.
✅ Go through your current investment and plan further investments accordingly.
- Large & Midcap / Multicap / Flexicap Funds
- These are best suited for long-term investment and wealth creation.
- They are a mix of large, mid, small-cap companies to handle market volatility.
- Hybrid Equity / Balanced Advantage Funds
- These are good for people who want the growth potential of equity along with some safety.
- They offer a mix of stocks and bonds.
- Multi-Asset Funds (Basket of Investments)
- These are investments that combine gold, debt, and equity.
- Diversification is very important – never put all your eggs in one basket.
Most Important Lesson: Time in the Market, Not Timing the Market
No one can time the market. Nobody knows when it will go up or down.
Buying at the lowest and selling at the highest is almost impossible because predicting the market is not possible.
The best thing you can do is stay invested for the long term to enjoy the power of compounding.
✅ Key Takeaways for Investors
👉 Stay Invested — Don’t let market falls make you panic; instead, do your research and invest in the best available options for the long term.
👉 Continue SIP & Rupee Cost Averaging — When you buy during market ups and downs, that’s when rupee cost averaging works in your favor.
👉 Review Your Portfolio — Always assess your limitations and risk capacity, and then plan your investments accordingly.
👉 Think Long-Term — Be patient and invest with a long-term perspective. Take care of basic necessities like health insurance, term insurance, an emergency fund, etc.
Final Thoughts
Be serious about building wealth. Start small, but start investing with a long-term horizon. Remember, time in the market, not timing the market, is what truly matters.
Treat market dips as opportunities to invest more, make smart decisions, and avoid panic.
Always be greedy when others are fearful, and always think long-term.
Try our SIP calculator to plan your investments.