Scene: A cozy café, with soft music playing in the background. Rina, an investor, looks anxious as she sips her coffee. Pradeep, her financial planner, sits across from her, listening carefully.
Rina (frowning):Pradeep, I’m really worried. The market’s been crashing — my portfolio is bleeding. The Sensex is down, and my small-cap funds are a disaster. I’m wondering if I should just pull out everything before it gets worse.
Pradeep (calmly):I understand, Rina. Market downturns can be scary, especially when you see your portfolio value drop. But let’s take a step back.
Rina:Oh? So what do you have to say?
Pradeep:I acknowledge that there is sharp decline in the Sensex and small-cap indices over the last six months siince September 2024. A lot of investors are seeing substantial losses, just like you.
Rina (sighing): So I’m not alone in this mess?
Pradeep (smiling):Not at all. But here’s the key part — if you zoom out and look at the last 5 year window, the Sensex has moved at the rate of 22.4% annualized rate that means your money would have doubled in approximately 3.2 years and small-caps have skyrocketed by over 39.4% CAGR and midcap by a whooping 66.44%.
Rina (surprised): Wait, really? Even after this crash?
Pradeep: Yes! The market might be down now, but over time, it has delivered tremendous growth. That’s why staying invested, even during turbulent times, is so crucial.
Rina:But emotionally, it’s just so hard to see my money shrink like this.
Pradeep: That’s completely valid. You have to be emotionally resilient. Short-term losses are painful, but if you have a gaol-based financial plan which focuses on your asset allocation that can help you avoid making rash decisions. Also Remember if you have over allocated to the mid cap and small cap you need to trim down your portfolio (as your financial plan was already well prepared for that). Remember, panic selling locks in your losses for forever.
Rina (nodding slowly): So, you’re saying I should just stay the course?
Pradeep:Exactly. We’ve built your portfolio with long-term growth in mind, and market dips — even severe ones — are a normal part of the investing journey. If anything, this might even be a chance to accumulate more units at lower prices through your SIPs.
Rina (smiling a little):I guess I need to trust the process and not let fear dictate my decisions.
Pradeep: That’s the spirit. Market storms will pass, and patience often rewards those who stay steady.
Rina:Thanks, Pradeep. This chat helped me breathe easier. I’ll hang in there — and maybe even top up my SIPs!
Pradeep (laughs): Now you’re thinking like a pro investor, Rina. Let’s ride this out together.
Simplified Money Talks 