What to do when the stock market crashes?

In the recent years, people have eventually realised that along with savings, investment becomes very necessary. As the daily expenses of people are increasing, they have realised that, there is a need to increase their investments as well. Also, as people are getting more educated they understand the importance of investment. As it is said, money lying idle in your bank account is an opportunity lost.

There are numerous and different investments options available. Some of them are Mutual Funds, Fixed deposits, Recurring deposits, Public provident fund, Employee provident fund, Pension System, Stocks, etc.

Among these, Stocks are most commonly used as an investment vehicle. Stocks are offered by companies listed publicly on stock exchanges and can be bought by any person who wishes to invest his money. When a person buys stock/shares of a company, he becomes a member of that company.

To invest in shares means to gain a highest return from all other investment options. But as we know more the return more is the risk attached to it.  Share market is usually very unpredictable. One minute the market is reaching its highest mark and the very next minute – boom- reds are more visible than greens. This is because share market is dependent on numerous factors, it will fluctuate even if one of them changes. Bulls and Bears are the terms used in share markets for increase and decrease in prices of shares, respectively.

That does not mean one shall not invest in stocks due to the huge risk connected to it. Sometimes people fear losing all their money, so they do not even think about investing in shares. Share market crash down are very common and it is very important to know how to deal with such situation rather than stepping back and losing a chance to earn a good amount of return.

Share Market Investment is a long-term investment. You sow seeds today and you will get fruits after a particular period of time, here it is concluded that patience is the main key especially when the share market crashes. A good planning in an uncertain market is buying and holding the shares.

Also planning and knowledge about share markets play an important role. Keep yourself updated and also study share market on a daily basis, this way you will get to the depth of the market. One can also take consultancy from stock brokers as they have expertise knowledge for the same.

Diversification is also very important as it is said “Never put your money in one basket” this means to have a diversified portfolio. If you invest in different types of shares, even if you make a loss you can cover it by selling other shares. A diversified portfolio will not only help you in earning more returns but also will help to make fewer losses.

During a dip or a crash have courage to buy stocks it can prove very much beneficial in the near future. With this risk sometimes a person can make a fortune, but make sure you do all your research work properly before jumping to the conclusion.

Your financial planning matters too during a dip, as you have to spend on your basic daily needs. Make sure you do not invest your whole salary, keep a part of it in your bank account, so that the liquid cash can help you with any monetary emergencies.

‘Do not panic’ is a sentence we always use when we meet any unavoidable circumstances/situation, similarly, goes when there is a correction or a crash. Few people start panicking and take a wrong decision and suffer huge losses as well. One should understand those correction, crashes, share market going all red are inevitable factor and no-one has control over it, even a person with highest knowledge about share market.

Understand that the crashes are not permanent and there are better days ahead, so use that time for reassessing your portfolio and keeping in check the performance of the company in which you have invested your money.

Remember all this factors will help you to deal with crash like situation and make sure you take opinion from your financial advisors as they will show you the right path and save you from any loss sufferings. Think practically without involving emotions for avoiding taking hard and fast decisions.

Share Markets can be boon as well as curse at the same time, but with all the above mentioned points you will be able to tackle difficult situations which are surely going to arrive at some point while dealing in stocks. So it is better to be prepared and acquire the best returns as much as possible.

Do not jump over and take small steps initially, so one day you will never get upset by a crash down of share market

Author Bio

Qualification: LL.B / Advocate
Company: Constellation Blu
Location: Maharashtra, IN
Member Since: 22 Jul 2020 | Total Posts: 2

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May 2021