Once you have assessed your financial plan, it's important to take a deep breath and look at your portfolio. This may sound like obvious advice but it's hard to be rational when many of your investments have dropped 30-40 per cent or more. However it's important to avoid the typical mistake of inexperienced investors: buying when the market hits its highs, panicking after a downturn and selling just when the market is bottoming out.
What you need to do is to examine the long-run fundamentals of your investments. For example rising interest rates and slowing demand may hurt an auto company but eventually interest rates will fall again. If you think the basic business model and long-run growth prospects of the company are sound then you should hold the stock and wait for it to turn around.
Similarly if you have decided that stocks remain part of your long-term investment plan don't worry too much about short-term fluctuations. Continue investing preferably through a systematic investment plan in a number of well-diversified mutual funds.
Also read: Filing tax returns? Top FAQs answered!
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