No matter their financial goals or background, every investor is advised to incorporate at least a few long-term investments in their portfolio. With the power of compounding, these long-term investment plans in India have been relied upon to help save taxes and yield favourable returns over time. However, with the current pandemic making a substantial impact on the market, there is widespread panic among investors of all kinds.
It is true that the restrictions that have been placed to slow the spread of COVID-19 have adversely affected the global economy. Indian benchmark indices like Sensex and Nifty have seen major declines while the value of several long-term investments eroded in the COVID-19-induced market crash. However, it is important to remember that these events are not unprecedented and should not deter investors from placing their faith in the Indian market.
Historical market trends during similar virus outbreaks
To understand the current COVID-19-induced market conditions, we must take a closer look at how markets were impacted by previous periods of outbreak. The SARS outbreak of early 2003 resulted in the Sensex dropping to -10.1%, and yet after just a year the market had bounced back with Sensex at an impressive 83.4%. The same trends were observed during outbreaks of AVIAN influenza in 2004, EBOLA in 2013-2014 and ZIKA in 2015-2016. Each time, the market proved its resilience and returned with a bang.
Therefore, even though news of fluctuating market conditions might seem concerning at present, it might be worth holding on to your long-term investments for the future. If you have or are planning to pursue any tax saving investments, it is essential to not give in to panic and instead focus on the big picture. For instance, purchasing an insurance policy at this time would be one of the preferred options in protecting your finances, helping you save taxes and yield long-term benefits.
Tips to weather the markets during the COVID-19 pandemic
There is no doubt that the market is going through a rough time, but there are still various positive aspects to be observed. Various stocks in the financial markets are currently trending far lower than their long-term average valuations. Hence, while there is certainly chaos in the market, there is also opportunity to be found. As an investor, it is important to not let panic drive your decisions and instead stay focused on your investment goals.
One of the most prudent investment decisions you can take at this time is to continue to hold on to your essential long-term and tax saving investments. Keep in mind that your long-term goals remain the same, and when the market has eventually stabilised, these investments will prove valuable. Secondly, in the midst of these uncertain times, make sure to secure the financial future of your loved ones with a reliable insurance policy that provides a comprehensive coverage.
Lastly, in order to weather these market conditions, make sure to prioritise risk management more than ever before. Also, avoid making any sudden changes to your portfolios, focus on diversifying your investments and stay invested to keep on track with your plan for achieving various long-term goals.
The current COVID-19 pandemic might have made market conditions difficult, but there is a lot of value in holding on to your current investments. As the market conditions stabilise over time, these investments will inevitably yield the desirable results, and help you stay on track with your goals. In addition, while managing risks, it might be prudent to consider making new investments such as a comprehensive life insurance policy that can help you be rest assured that the financial needs of your dependents would always be looked after. Make sure to look out for terms and conditions mentioned under the policy before you make your final decision.