In the last few weeks, we have seen some ups and downs in the investment market. Nothing new, the market goes up at times and goes down at other times. Even though September was not a great month for investors, the overall investment market is still up 15% in 2021. Most years see gains of 6%-8%. The problems tend to start when investors see a loss in their accounts. Human beings are emotional and when we see our investments drop in value we equate it to the hard work we’ve put in saving, working, and sacrificing. To see some of that work “evaporate” makes us do irrational things and can cause us to make expensive investment mistakes. Here 5 tips to help you remain calm during a period of market volatility.
- Reassure yourself that this is what makes my investment Halal.
We do not like to lose money. But the reality is when it comes to your investments being halal you should be earning a profit when everybody is earning profit. You should lose when everybody else is losing. Know that these days of losses and investments going down are proof you have invested in something halal and this puts you in good standing with Allah SWT.
2. Remind yourself why you are investing.
Are you investing for your kids education? Are you investing for your retirement? Are you investing for a trip to hajj? Unless you are planning to use the money in the next few days, waiting and being patient is not going to hurt you. Further, over time the markets have historically always gone back up after a period of being down.
3. Re-examine what you are invested in?
Are you invested in stable and profitable investments or are you gambling? If you are invested in good profitable companies, ask yourself will the companies you are invested in stop selling their goods and services now that the market is down? If the answer to this question is no then hold on to your investments. If the answer is yes, it might be worth exploring alternatives.
4. Buy More!
If you know you have good investments, when the markets go down, you have an opportunity to get them at a cheaper price. Imagine going to a store and a laptop costing $1000. If you go to that same store on boxing day or black Friday, that exact same laptop will be selling for $800. Obviously, we would rather buy the laptop at a discount. Think about your investments in the same way. When the markets go down, you can buy more investments at a discount.
5. Tax-Loss Selling
If you truly made a bad investment and that investment lost money. You could sell the investment at a loss and use it to offset taxes on capital gains. It is always a better strategy for the investments you make to be profitable, however, in some circumstances, this tax-loss selling strategy could be beneficial.
Overall, when markets go down it is best to try and remove our emotions from the situation and think logically and critically. We need to do our best to remain calm and wait out the volatility. Remember historically, the markets have always come back.
Articles on this website contain opinions of the writer and may not reflect the opinions of Global Maxfin Investments Inc. The information contained herein was obtained from sources believed to be reliable, but no representation, or warranty, express or implied, is made by the writer, or Global Maxfin Investments Inc., or any other person as to its accuracy, completeness, or correctness. This website is not an offer to sell or a solicitation of an offer to buy any of the securities.