Things to do when market crash-like situation emerges

Recently, we had seen market crashing like a falling knife wherein, Sensex fell from its all-time high of 42,273.87 and registered a new low of 25,638.90, in just a couple of months.

However, markets did recover quite a bit from the lows though it is yet to reach its previous all-time high. Usually, when the market witnesses such a fall, investors become anxious. So, here are five things that you should do when the market crashes.

Be calm

Many studies have been carried out around the globe regarding behavioral finance. These studies have proved that behavioral biases do govern our investment decisions and indeed, lead to irrational investing. Hence, it is important to be calm during such a situation so that, you do not take any hasty decisions in panic. As you know, markets work in cycles and it neither continuously rises nor falls. Hence, indeed after the market crash, it will take some time to rise. So, it is important to have patience.

Look for opportunities

Market crashes do offer us a lot of investment opportunities as we can see many quality stocks at lower prices. In fact, this also helps equity funds to get quality stocks at lower price. So when market recovers, these funds tend to perform better. Thus, in such a situation, rather than pulling out your money, it is better to continue your investment and further invest in equities via systematic investment plan (SIP).

Withdraw less if you are retired

A person in retirement phase requires regular income. In normal circumstances, he would withdraw from corpus as per his living standards. However, in a situation similar to market crash, it is wise to curb your expenses for some time by giving up some or all of your discretionary expenses and just withdraw the fixed outgo. This will help your portfolio to survive for a bit longer duration.