Stock market crash: Should you sell your mutual funds now? - Market crash: What should you do with your mutual fund portfolio? (2024)

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Market crash: What should you do with your mutual fund portfolio?

A crash in the stock market is the worst fear of any investor. Gains made over the years get wiped out in days. If you have equity mutual funds in your portfolio, it will be affected during a crash. As the stock market is down now, what should you do with your mutual fund portfolio?

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First rule of market crash: Don't panic

Investors usually start panicking when the market crashes and make wrong decisions. So we need you to avoid that. Keep your calm.

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Are you planning to sell your mutual funds when the market is down?

The next thing you need to keep in mind is that just because the market is down does not mean that you should bail out of your investments. If you sell your mutual funds when the market is down, you will lose money.

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It's a long-term game

Think long-term. If the market is on its knees today, it will stand up again tomorrow and may be in the sky if you wait a little longer. In the long run, these volatilities are likely to not impact your portfolio severely. So sit tight and let it pass. Investments in equities usually provide inflation-beating returns in the long run.

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Markets will reward you for not exiting during a crash

Mutual funds are long-term investments. If you stay invested, you can take advantage of rupee-cost averaging. Markets have rewarded those who have not pulled out their investments during crashes. When markets fell 38% during the 2020 Covid crash, some funds compounded investors' wealth by 14% or even more, according to a report by Kotak Securities.

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For investors

As an investor, you cannot prevent a market cash or its impact on your mutual fund portfolio. All you can do is stay calm and wait for the turn when the market goes up.

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