The Problem

You start investing systematically; figure how your investments work. You start gaining confidence with the upward direction of the markets. You believe that investments in markets are a one-way street to rise and there is nothing called a fall in the value of your investments. You are unable to cope the day the markets fall, even if marginally. The loss, in most cases could be just notional, yet you get affected and feel that you are losing more than you have gained. This is so much opposite to your behaviour when you meet with a minor car accident—you wake up next day and drive the same car to work. Investing is like everything else around you—pick lessons from examples around you to cope better when you face such a situation.

Example

You started investing when the Sensex was 26,500 in Jan 2017, it goes up to 30,000 on April 26. You feel wonderful. Now, if you had invested a year earlier in Jan 2016 when the Sensex was 26,100, it remained the same on April 26. You would have cursed at the markets for not moving at all.

Suggested intervention

Everything moves in patterns and cycles. Understand how investments behave, depending on the changing market environment. It will help you factor in the period of gains with as much ease as you will be able to cope with the phases of dips. Speak to people who have seen a full market cycle on how they managed their worries when the markets had a fall. The experience will help you manage your anxieties better during market downturns, Learn to check your emotions when the markets go up by 1000 points, to handle the situation when they fall by even 200 points.

Tip

When you invest money, there is risk of it losing its value depending on the market trends. Assess your risk-taking ability before committing to any financial instrument. For a first time investor, direct investment in the stock markets is similar to someone just about to start learning to swim, jumping into the deep end of the pool.

Read: Inside the Mind of Investors

olmdesk@outlookindia.com