Being a doctor is being in a profession that requires a combination of personal skill and knowledge. As the world is applauding doctors for their selfless services, we also want to do our bit by helping them rewrite their financial story so that they can manage their wealth during all phases.
The stock markets have faced crashes before nothing has befallen the markets quite like the current situation, thanks to the fast spread of coronavirus and subsequent lockdown. The slippage of world economy lustre has put a significant risk on health and finance of people worldwide. The quivering financial landscapes have put light on the need to follow asset allocation and maintaining a much-needed emergency fund.
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The unplanned liabilities, obsessive buying culture, high lifestyle expenses are putting most of the people under financial stress from the reduced or temporary halt of income. But these sharp falls in the stock markets over the past few weeks have made the prices of several stocks look attractive, thus tempting investors to make fresh purchases.
The times have definitely changed. Earlier people were sceptical about entering the market during a crisis but now, as per ET Markets news, Upstox is set to report a 35% jump in new Demat accounts opening for the Jan-March 2020 quarter, compared to October-December 2019. Quite contrary to the traditional way of thinking, isn’t it?
The Nifty dropped 1,135 points, or 13 per cent, to close at 7,610, the lowest since April 8, 2016. This was the steepest fall for the index, both in percentage and point terms. The Sensex dropped 3,935 points, or 13.2 per cent, to end at 25,981, the lowest close since December 26, 2016. Big crashes have hit the stock market many a time however, each crash has typically been followed by a healthy recovery and rally for 3-5 years.
As before embarking on your medical profession journey you had to first take a call on your final goal, it works the same way in investment wherein, you must define your investment goal without fail. Review your current portfolio and make sure to not make any long term decision on any short term correction.
If your direct equity or Mutual fund investment is in alignment with your financial goals, then avoid rash decisions and exiting them mid-way. Doing so turns the whole exercise of investing futile, giving you a bad investing experience. Yes, the market volatility can be worrisome in the short term, but long-term investors need not fret.
Bottom fishing refers to investing in assets that have experienced a decline due to intrinsic or extrinsic factors, and are considered undervalued. The stock market is currently more volatile due to the global pandemic, but you can buy equity on low levels that can be helpful. However, avoid bottom fishing because if you deploy money without knowing how much fall is expectant
in the market, it can burn your fingers badly. You can invest your money in the market but in a staggered way don’t try to time the market.
We are receiving queries from many of our doctor clients on how they can enter the market. As people are relishing on Ramayana and Mahabharata, one Ramayan event can be looked upon in detail. When Hanuman was advised to go and bring the Sanjivani Buti to cure Laxmana, he goes and carries along the whole mountain with him amidst the confusion. So in this time where so many stock prices are moving abruptly even beyond their realistic valuations, we can take this learning from the Ramayana to avoid such confusion where you unnecessarily buy random stocks just because they have fallen, without considering the other parameters.
Index funds could be a good option at this point in time. It follows a passive investment strategy by replicating a benchmark index like NSE Nifty or BSE Sensex. The fund comprises of stocks in a similar proportion to the benchmark. This delivers returns similar to the index. These are subject to market ups and downs. They are smart tools for diversification and can be used wisely in 
combination with actively- managed funds to build a solid long-term portfolio. Discuss with your financial coach as well so that he/she can guide and help you in designing your suitable equity portfolio.
Since there is no foolproof method for predicting what type of mutual funds or shares will perform better than others during any given timeframe, stick to your financial goals as per your suitable asset allocation. However, some conditions can make index funds a smarter investment choice than actively- managed funds.
Have you taken stock of your finances yet?
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