In the year 2020, we saw a massive stock market dip during the 1st wave of the coronavirus and most investors were unprepared for it. So in this video, we shall look at 7 responses and strategies that investors can apply in the event of a stock market crash

While these strategies can be used independently we suggest you to apply them as combinations which, we believe, is more likely to offer a better response

What's covered in this video?
00:00 INTRODUCTION
00:52 1. RESIST THE URGE TO MAKE PANIC SALES
03:20 2. RESIST THE URGE TO MAKE PANIC BUYS
04:52 3. KEEP YOUR PORTFOLIO REBALANCED
06:37 4. TAKE ADVANTAGE OF TAX LAWS
08:21 5. PROTECT YOUR PERSONAL FINANCES
10:22 6. LOAD UP ON EQUITIES (BUT CAREFULLY)
12:27 7. FOCUS ON THE LONG TERM

👉 RESIST THE URGE TO MAKE PANIC SALES

When the market crashes, selling off one’s stocks and equity holdings is very tempting. Afterall, there’s a pandemic, there’s an asset bubble that’s about to explode, there are scams being revealed. But what history shows us is that the best and worst performing days often cluster around the same time So, remember fear always leads to panic and it is, in this panic that amateur investors end up selling their investments at depressed prices

But what is also true is that panic always gives way to recovery. It’s happened not once, not twice but every single time so if you don’t do anything and simply allow for your SIPs to continue when the dust settles one would see that your investments would have still done really well.

👉 RESIST THE URGE TO MAKE PANIC BUYS

Curb your enthusiasm into making panic buys. When markets tank the eyes of many investors light up. And the common approach here is to buy some index funds or invest in bluechip companies.This may or may not be the right thing to do and something we’ll discuss later but one area that everyone forgets in these moments is to remember one’s appetite for taking risk. It is in your interest to know what your risk tolerance is so that you are less panic stricken when the market tanks

👉 KEEP YOUR PORTFOLIO REBALANCED

Rebalancing is an investing strategy which helps reduce portfolio risk .. and in most cases offers better risk-adjusted returns to investors. This is done by buying and selling portions of your portfolio in order to set the weight of each asset class back to its original state or the targeted allocation. Rebalancing helps in not only preserving your investment style but does an excellent job of managing portfolio risk especially at a time when the markets are choppy

👉 TAKE ADVANTAGE OF TAX LAWS

Tax Harvesting -Saving tax on a capital loss by offsetting it against a capital gain.This technique serves as a great way to offload some of the weaker stocks or funds in your portfolio and to replace them with potentially higher growth funds and securities.
Blog - https://www.etmoney.com/blog/tax-harv...
Video -    • Tax loss harvesting kya hota hai | Mu...  

👉 PROTECT YOUR PERSONAL FINANCES

Few basic things can help protect the finances:
Create a personal cash flow statement
Create an Emergency Fund
Manage your Debt

👉 LOAD UP ON EQUITIES (BUT CAREFULLY)

Equities are relatively cheaper but it's still important to look before you leap. The first area one can attack when equities are available on the cheap is to go after the long term investment accounts like NPS or ULIP accounts i.e. they come with a multiyear lock-in

It’s in these instruments that you can seriously explore switching from a conservative asset allocation to a more aggressive one by loading up on equities.

👉 FOCUS ON THE LONG TERM

For long term investors is to keep a level head and not watch the market too closely. Instead watch out for your behaviour by resisting the urge to do panic buys and panic sales, making sure that your portfolio is rebalanced and that you are taking advantage of the tax laws protecting your cash flows and most importantly, understand that volatility is an important part of the investing process and there will be many more stock market dips in the future.

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