Nifty down 12% from peak. Radhika Gupta on how to deal with three emotional responses
Radhika Gupta, CEO of Edelweiss Mutual Fund, says it is important to manage emotional responses as there is a natural temptation to panic and take action that may not be good for your portfolio.
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The first emotional response during a market crash is that investors buy things that are too expensive and then there is a temptation to sell and book losses. To which, Gupta advises that one should embrace volatility and try and hold on to these investments for the long term.
“The second response would be to stop investing exactly when you need to invest by cancelling or pausing those SIPs. And my push would be to let them go on because now you’re buying units at cheaper levels. Generally, staggered investment is a good principle in these markets,” Gupta said in a video released on social media.
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During a volatile market, investors also think of moving to cash, fixed deposits or 100% to safe instruments. The market expert advises investors not to have such a binary approach to investments in the long term. A better approach would be to be in the middle path and choose a mix of equity and debt.
“It’s better to be in the middle path and be in products like hybrid funds, balanced advantage funds which have a mix of equity and
