Friends, Nifty went down more than 10,000 today
The market went down a lot
Looking at which even very big investors got afraid
And apart from that retail investors are very afraid about what they should do
In this volatile market, people think that they should stop their SIP
A lot of people say that their stocks portfolio
They will sell that and whatever money is left they will put it in the bank
So in this case the question comes, what should I do?
How can i intelligently plan my investment
And if I have already invested
So how should I plan in the coming time
I, Jagdeep Singh, welcome you to the Groww channel
Today's video is very important
Because I don't want to tell you why the market went down
As you all know there are many reasons
Because of which the market is very volatile right now
A lot of people are panicking
A lot of selling has been happening because of which Nifty has gone down by more than 10,000
So at this time, what is important are those 5 key learning that I would like to tell you
That will help retail investors in understanding
That in this time of volatility and panic
How can they plan their investments
Apart from this, what are the mistakes they shouldn't make
Avoiding which, in the coming time, they can plan a good investment now
And make a good return in the coming time
Let us start today's video
First, if I talk about why the market is going down
There were a lot of reasons behind this, but a very important reason that caused this was Coronavirus
After this, a lot of people were expecting there to be a correction in the market
The market has gone high in price already
So after that when these two reasons merged
There was panic in the market
And when the market is in panic, people sell their stocks in the market amidst that panic
And when the selling starts
There are no buyers there, only sellers
And when a lot of sellers come into the market
The index, the market
The particular stock that you sold at a higher price, the sale of that comes to a very low price
Because of which their price starts to come down
This was a background about why the market is coming down
Now I will come to those 5 key learnings
On which you have to pay a lot of attention in this time of panic
And which can help you avoid making mistakes
So the first thing I want to tell you
That is related to SIP
If I talk about SIP
When you invest in an SIP, every month some money is cut from your account
And that money get invested in the mutual fund where you started the SIP
So here the biggest mistake that people and retail investors make
Is that they stop their SIP
So the first mistake that you should avoid
You should not stop your SIP
Because SIP is very important
To reduce your average price
Why shouldn't you stop your SIP at this time?
So if you go to any investment advisor or anyone that invests in the market
They will explain two things to you
When the market is up, you should buy less
When the market is down, you have to buy more
So SIP meets this objective, which means that if you start an SIP
When the price is high, you buy less and when the price is low you buy more
This happens automatically
How? I will explain this to you with an example
Consider that you start an SIP of Rs 1000 in a particular mutual fund every month
And when the price was high, when the market was up
The particular mutual fund you invested in, its NAV was Rs 100
Which means that every month you bought 10 units when the market was high
But now consider that there was panic in the market
Everyone started selling
So even that mutual fund will be affected because when the market goes down, even mutual funds go down
Now consider that the NAV you invested in, the value of that NAV
Fell from Rs 100 and is now Rs 50
Which means that it went down by 50%
But even now you didn't stop your SIP
Even now you buy Rs 1000, every month
So how much you will buy this month
1000/50
Which means that in this month, you will get 20 units
So your overall objective that every investment advisor tells you
When the market goes up, you have to buy less
When the market goes down, you have to buy more
So even in this case, when the market came down, when its NAV went from 100 to 50
In that case you bought 20 units instead of 10 units
Which means that automatically when the market goes down
SIP helps you to buy more
So in this case the biggest mistake that retail investors make is that they stop their SIP
And they say that when the market goes down further
Then they will start their SIP
So beware of making this big mistake
You should not stop your SIP at this time
This is the bigget key learning of this video
Let us talk about the second key learning
Before going onto the second key learning, I want to ask you a question
When you invest in any company, consider a large cap company, what is the first thing you see?
If it is an intelligent investor, they first see its fundamentals
In fundamentals, it first sees its earnings
They try to understand its business
They see its cashflow
After seeing all this they understand that this company is very good
I should invest in this
And after that, the money that they have earned from here
They invest their hard earned money in this particular company
By thinking that this company will perform well in the coming time
But after this when the market goes down a lot
A lot of people go into risk
They think that the market has gone down a lot
Recession has come
In that case, the company that they have invested in shouldn't close
If it closes
All the money invested there will go to 0
Which means that all the invested money will drown
But in this case you should beware or rumours
In this case you should look at your risk very clearly
What is risk?
The biggest risk in the case of any company is its working capital
Now you must be thinking what working capital is
So the biggest risk that comes in front of people in a case like this is the working capital of the company
Now what is working capital
Now consider that you run a company and to run it
You keep a little money to yourself
So that if any adverse situation comes up, you can use that money
You can run your company in that difficult time
For 6-8 months
So all the big companies whose fundamentals are very strong
Their working capital is good
And those companies keep a good amount money with themselves
As a cash reserve
So that whenever there is a difficult time
That company is able to survive
And whenever the whole economy comes out of that recession
And when it starts to go up again
In that case that company can perform very well
So you should not come into the rumours that you should sell everything
And that company will shut down in the coming time
If a company is fundamentally strong
Their working capital is good
So it is possible that in the difficult time that company's share will go down
But if that company is strong and if you have invested in it
You should not sell it
You should retain there
And if you think that the company is very fundamentally strong
And its price has gown down more than its fundamental price
You should reconsider buying it again
And little by little you should start buying it again
Now I will talk about the third key learning
A lot of people don't invest because they think that when the market goes down
Then they will invest, when the market corrects
So maybe this a good time for people who had kept money aside and thought that when the market goes down
Now they should invest
But now the question comes, when should I invest?
Should I put in all my money today?
Until now Nifty is down 6%
So if I have some money with me, should I invest all of it at once?
Because no one knows what the bottom is so maybe I should invest now
So in this case I want to exlpain to you very clearly
If you have some money that you want to invest
If you have some money in liquid fund or in cash
And you think that the market has gone down a lot
I will invest all my money
So pay a lot of attention here
You should not invest all your money at once
If the market is going down
No one know how far down it will go, if someone is telling you, they're probably lying
No one knows how far down the market will go
Because predicting the bottom is almost impossible
So in this case if you're thinking that you will invest all the money in one day
You should not do that
In this case if you have some money
You want to invest in the market
You should start the SIP for it now
If you don't want to start an SIP or you don't like it
And if you want to invest in the stock market
So if you want to invest money in the stock market
You should do that in small chunks
Do not invest all your money at once
If you make small investments, consider that if you have Rs 100
Invest Rs 10 today
Invest Rs 10 or 20 depending on your personal risk
Because in risk, it is possible that the market can go down further tomorrow
So if you invest all your money today
If the market goes down further in the future, you will not have money to invest
But if you invest in small chunks
If you invested a little today and the market goes down further in the future
You invest a little more
You price will keep going down
But now people ask the question, that if the market goes up in the future
So if the market has gone down by 6%
If you have invested a little today
Even if the market goes up 4%, your average price does not go up that much
So if you invest in small chunks at this time
You can save yourself from panic
You can make a good portfolio
You will get a lower average price
And you can expect good returns in the coming time
Now I will come to the fourth concept
Which is very important which everyone must have told you about
But to implements that practically is very difficult
And this is the concept of deiversification
Diversification means, don't put all your money in one place
Put your money in different assets
In different mutual funds and in different stocks
So that your risk can reduce
Your risk will also reduce so that when the market goes down
Even your loss will reduce
It is possible that your return will be a little lower, but your risk becomes a lot lesser when you diversify
But now people ask the question how can I diversify?
Some people say that they have diversified very well
In mutual funds I invest in large cap
In small cap and in mid cap as well
But even then my portfolio is bleeding
So diversification is always done at different levels
First, in type of assets
So stocks is one type of asset
While diversifying you should always look at the kind of stocks you want to invest in
So the first step of diversification
You should invest in the type of assets
First, a little in stocks
Some in debt
Some in commodity, like you can invest a little in gold
Apart from this, you can invest a little in government securities
And you can keep some money in liquid funds
So diversification can help you a lot in difficult times such as these
Because when your overall portfolio for stocks goes down a little
There are some assets that give you moderate returns
Because if I look at the recent times
When the debt funds were going down a lot
A lot of people put a lot of money in stocks
But now even the stock market has started to come down
But now debt mutual funds has not gone as down as the stock market has
So in this case if you had diversified well
You would have gotten moderate returns
If you would have invested some money in gold directly or indirectly
Maybe you would have gotten a higher benefit of diversification
So like I told you in the starting that if someone
Invest in small, mid or large cap, their loss would have been more
Because they have diversified in the stock market
They didn't diversify in asset classes
So put some money in stock, some in debt
And some in gold or other commodities
Which can act like a hedge in this case
And after that when you have to do the second level os diversification
So in stocks you can decide how much you want to put in mid cap
And how much you want to put in large cap and small cap
In the same way when we talk about debt mutual funds you can see
If you have to put it in low duration, liquid fund or something else
So diversification always becomes important for you
When you make your portfolio
So the panic that is created in the market gives the biggest learning that
We should always diversify
So that in difficult times, when we get a good opportunity
You can remove money from one asset and invest it in another asset
Like when the stock market is down
If you hadn't diversified
If you had put all your money in the stock market
You would have been in loss now
You would not have more money here to invest
So that your average price can reduce
So if you had some money in liquid fund here, you could have removed that and done an STP
And when the average price reduces here, you can get the benefit of that
If I tell you in short
Diversifying is very important
If you are starting to make your portfolio now
From now itself you should think about diversification
Now I will talk about the fifth learning and the fifth learning
Which is a mistake made by a lot of retail investors
When the market goes down, people say that they will sell their entire portfolio
And remove the money from here
Keep a cash reserve so that when the market goes down further
I will invest again
And a lot of people not only sell their stocks portfolio but also their mutual funds at this time
By saying that when the market goes down more, they will buy then
But you should never make this mistake
There are two types of loss in the market
One realised loss and another unrealised loss
So if your portfolio is down
That is your unrealised loss, you haven't realised it yet
But if you sell your portfolio
Then you realise your loss
Which means that you book your loss
And you should never make this mistake
Because in this entire video I have told you many times that it is impossible to time the market
It is impossible to predict the bottom
So if you sell your portfolio today
By saying that tomorrow you will get it at a lower price
You are making a very big mistake
Here you are making a pure gamble which you should never do
If your portfolio is down, then wait
Because when you had invested, as a retail investor, as an informed investor
You would have done some research for it
You would have confidence on your investment
Only then would you have invested
So do not let your confidence shake now
And never make the mistake of selling your portfolio and buying it again
Because in this case there are a lot of charges
Which you ignore
Like if you have invested in any mutual fund
If you redeem from there now
It is possible that you are charged an exit load
So at this time if you sell an asset consider that you redeem a mutual fund
There are chances of you having to pay an exit load
Apart from this if you sell your stocks in the share market
There can be brokerage and other transactional charges that you might have to pay
And when you buy this, you will have to pay them again
So don't ignore those things
If you think that your invested money
Is in a good asset
Which has gone down only temporarily
You should keep your portfolio maintained
But if you want to buy more
If you have a cash reserve
You can invest there now
You can reduce your average price
But selling and buying it again is a pure gamble
Which you should avoid at all costs
So this video was purely for educational purposes
We had only one motive behind it
Retail investors like us should not panic at this time
You should not panic, if you have money
This is a good buying opportunity for you
But even buying should not be done in one day
You should buy in a deferred way
And keeping these 5 things in mind
I hope that you don't panic and plan your investments in a good way now
And you can make good returns in the coming time
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