MUMBAI: Gen Z investors who entered the markets during the Covid & post-Covid years are in panic mode. Having not experienced significant market corrections in their short investment journey, they are jittery looking at some red marks in their statements, indicating month-on-month fall in portfolio values. They are also the ones who are regularly asking their financial advisors if they should take their money out of stocks and mutual funds, and put it in safer options like fixed deposits.
Contrast this with veterans, the seasoned long-term investors who have navigated sharp and brutal corrections like the global financial crisis (GFC in 2008-09), India’s currency problem (2013) and the start of the Covid pandemic (March 2020). They are not trying to tweak their investments and are staying put.Financial advisors and planners are assuring the Gen Z investing crowd that it’s not the time to panic, rather they should stay put and give time to their funds to grow. Those with surplus funds are being advised to consider investing in a staggered manner, through the systematic investment plan (SIP) and systematic transfer plan (STP) routes.According to planners, advisors and veterans of the market, history has shown that investors who panic when markets slide, rarely succeed in building wealth over the long run. According to Pankaj Mathpal, founder, Optima Money, the newer set of investors were confident that markets and their investments would only go up. “But it’s in the nature of the market that there would be periodic corrections,” Mathpal said.So far in the current phase, sensex and Nifty are down about 11% from their all-time intra-day high of over 86,000 reached in Dec last year. In contrast, soon after Covid started spreading in March 2020, the two leading indices had crashed over 35%. The subsequent revival had seen the index rise about 3.5 times in four-and-a-half years till Sept 2024. There are enough examples of crashes and then spectacular revivals to new life-high levels for these indices and stocks.According to Dhruv Mehta, chairman, Sapient Wealth, it’s important to remind jittery investors about the purpose for which they had started investing and the path that would lead them to that purpose. And that path certainly does not involve changing course along with every turn that the market takes. “Investors should not look at timing the market,” said Mehta. “A prudent approach would be to first access the time horizon for the investment and then put money in the right funds.”According to Mehta, long term investors with a horizon of more than five years, should look at equity funds favourably. Medium-term investors with about a five-year horizon should look at multi-asset funds while short term investors, with up to two-year investment horizons, should look at debt funds.Mathpal believes that for long term investors (like Gen Zs) flexi cap funds could be one of the best options, provided their risk-profile aligns with such investments. “And they shouldn’t be very greedy. They should invest over time, in a staggered manner. And for that SIP is the best route,” he said.
