Investing may feel like a rollercoaster, especially during times of market volatility. How to stay patient and calm in such a scenario. Interestingly the reverse situation is equally true. Investing can feel boring and equally challenging when the bear market is going on, and there is no movement in the equity market for a long time. 

The reverse question is equally valid, How to stay patient during CALM markets?

The urge to take some transaction or push your advisor to take some action when markets are quiet or volatile, it’s called Action bias. Too much volatility scares you and subdued markets makes you impatient. I do understand that you may also be doing it to get optimal returns for your investments. So, you feel the urge to tinker around with the portfolio, Buying or selling feels like action, and action feels like control. But most of the time, doing nothing is the action. It’s the hardest thing to do, and often the most effective. And you will learn that (hopefully not the hard way) over the years as you become a seasoned investor.

Managing your emotions in investing is most critical when the market dips or swings unpredictably or stays quiet for long spells.  Emotions like FOMO, panic selling, over thinking or analysis can prove to be detrimental to your portfolio performance in the long run.

So how to overcome this urge?

  • The best way to do that is to automate your investments. This way you don’t have to take decisions of investing every time. The system takes care of it. This is the reason why advisors and Mutual Fund Distributors keep talking about Systematic Investment Plan. (SIP)
  • Have an investment plan that clearly details the goals, timelines and investment approach. Refer to it whenever you need perspective or reassurance about your investment process
  • Asset allocation with portfolio rebalancing strategy, alternately you can just choose products with in-built portfolio rebalancing.
  • Have some side money, you can use this money for dips and swings. This can be parked in Liquid or Money market funds; this will not only take care of your emotions (urges for action) but also prevent you from touching the core portfolio
  • Try to create physical barriers between your emotions and the portfolio by deleting all tracking apps, limiting your account access, limit your access to noise from news channels.
  • Trust the investment process, remember that this is a long-term journey and you’re an investor and not a trader.
  • When in doubt, zoom out. Seriously, our psychological reactions are much different when we take a step back and ignore daily noise.
  • Also having an Advisor alongside to hand hold you through this journey helps, they are the experts, they have knowledge of market cycles and can explain the process with historical data points on similar situations in the past. Not that it’s a guarantee that the outcome would be the same but still will give you an indication.

Finally, it all comes down to experience, as in watching it happen over time makes you less concerned when it happens again. You will learn that in the long investment journey, there would period of volatility and quiet spells but that will have minimal or no impact on your goal as long as you stay the course with patience and consistency.