How to overcome fear and panic at the time of volatile market

When facing an unknown risk such as a pandemic, it's natural that you must meet these two basic instincts – fear and panic.??A systemic risk such as a pandemic will bruise every aspect of the economy.??When the pandemic was raging, an entire system worked for you so that:

?·??????Your investments remain relatively safe,

·??????Upside potential is preserved, and

·??????The downside is minimized.

?It was a system beginning with Government and Regulators and extended to fund managers and distributors.??As distributors of mutual fund schemes, and your well-wishers, our job was to listen to you and take your questions.??If you had any questions, you wrote and talked to us. Even as multiple lockdowns continued and our office remained closed, the Prokens Leadership Team worked round the clock.??We zoomed across the communication needs when face-to-face discussion yielded to video conferencing.?Necessity is the mother of inventions, and you and we improvised and made the best use of available tools and technologies.

?Asking the right questions and then seeking the correct answer helps you overcome the fear of the unknown. Fight or flight instinct comes under control when our thinking mind kicks in.?Luckily for the investing community, the availability of information was never an issue during the pandemic.?As pessimism kept piling up, so did the data and analysis quality.?When we did not have the correct answers to many of your questions, we got in touch with our principals and Fund Management Team. We ensured that any questions we couldn’t answer directly, we asked the AMCs on your behalf, and they responded with enthusiasm.??So, no questions remained unanswered.

?Our experience in navigating through the high and dangerous waves created by financial crises in the past told us that you, the investors, must overcome your fear and panic sooner than later.??Any actions taken under the influence of anxiety and panic would have hurt the performance of your portfolio when the crisis passes.??Over a few centuries of the existence of capital markets, the phenomenon of mean reversion manifests itself repeatedly.??From interests paid on fixed deposits to the capital gains on mutual fund investments, they are all driven by economies recovering from a crisis and growing to newer heights.??Growth in corporate earnings also drives your jobs, profession, or businesses, and if there is growth, there are returns to be made.??For our country, blessed by a young population of 40+ Crores, change is even more assured, and any change in the positive direction means more growth.

?So, what did we learn from the pandemic that raged over our economy and many other major world economies??Looking back, we all realise that we did well holding firmly to our chosen investing objectives.?There are, of course, many invaluable lessons the pandemic has taught us:

?1.????Sufficient cash (emergency) reserves are one of the essential sources to calm down the nerves.?When you suddenly see your rental incomes vanishing into thin air, the emergency reserve or the cash equivalents in your mutual fund portfolio helped keep you going.

2.????Good health insurance owned wholly by you is your staunch ally

3.????Prioritizing saving/investing over spending is a gold standard rule before or after the pandemic

4.????Diversification of your income and assets is the key to remaining calm and peaceful

5.????Asset allocation helps and gives your mutual fund portfolio a good downside protection

6.????Asset allocation also helps you to buy at lows

?To remind ourselves, the pandemic has only subsided and not ended.?The lessons from the emerging events, such as many weaker nations getting hurt and falling aside because of the pandemic’s aftereffects, are also invaluable to households.?Being prudent and being prepared to face unknown circumstances is never wrong. You mustn’t yield to any fear or panic in the short term and stick to your chosen asset allocation and investment objectives.??We are here with you to help you in every step of your financial journey.