TLDR: COVID 19 and how to tailor your investments

Unless you are living under a rock, you are probably bombarded with news of the Corona Virus or the more official COVID-19 virus spread across different countries. I have been part of several investment forums on telegram, reddit to keep abreast with latest developments and the possible impact of the virus on the global economy.

The immediate hot take is that the market is correcting, what do I do? But for longer term investors, markets correct and recover. So your plan of action should be as follows

1. Build up your emergency fund (3 to 6 months worth of expenses) at a minimum.

2. Build your war chest - FD or liquid funds

3. Continue your SIP / DCA - do not stop because the market is correcting

4. Save your bullets - do not deploy all your cash into the market too quickly

5. Stagger your investments - Wait until the market corrects by a minimum of 10% before you start deploying additional cash

6. Don’t catch the falling knife - Do not enter a stock or fund just because it has fallen sharply. Look at the fundamentals

7. Don’t make investment decisions purely based on dividend yield - a 6 to 8% dividend yield might be tempting, but understand why a company is providing you such a high yield

8. Always look for value - Enter into industries which are discounted and provide long term value

9. Long term dividend growth is more important than pure dividend yield

10. Use index funds to diversify risks across stocks, sectors and countries

11. Hedge your currency risk by investing across different currencies

12. No expert can predict the top or bottom, if someone claims they can, run in the other direction

13. Remove emotions out of the decision making process

14. Do not chase fads, Bitcoin might be tempting but unless you understand crypto markets well, do not get into it

15. Do not panic exit your positions

16. Breathe - this too shall pass.

Conclusion

It is tempting to exit your equity holdings or invest your war chest at the drop of a hat. But sometimes the most prudent thing to do is to do nothing. Take it easy, think twice and make decisions for the long term

Good Luck and Happy Investing