The market has gone down and rebounded. That’s the way the market behaves. You don’t know which way it will decide to turn. However the pandemic is real. People losing jobs is real. But more than anything else is the fear psychosis that things will never come back to normal. The media keeps bombarding you with news about the number of cases of Covid 19 which have grown by the hour.

Fact is that the media earns its money by playing on people’s fears. The pandemic is real there’s no doubt. But the human race has always found solutions to the toughest of problems. Ingenuity of human beings is directly proportional to the number of human beings (Julian Simon the Ultimate Resource). Today when we are more than 7 billion people on earth, we have much better lives than when there were 1 billion people on the earth. Sometimes it takes a little longer sometimes not so much.

This virus has been playing games for sometime, and the vaccine is still seeming elusive, so yes there is a lot of uncertainty. But already in most countries we have been able to now reach numbers of people getting cured and getting reported at almost similar levels. A lot of pharma companies are talking about having a vaccine ready by September this year (2020).

So now let’s get to you. If you still have a job – congratulations. You may have the job with reduced salary or normal salary. I don’t know your exact situation. I hope you and your family are safe and healthy.

If you don’t need the money immediately don’t encash your investments – the world will not come to an end. If you can somehow last these next few months without encashing your investments, then you would reap tremendous benefits because compounding will always play a role – Covid or no-Covid. If you let the compounding equation work uninterrupted you will have created a base to hit your financial freedom. If you have just started your investment journey over the last few years, you may not think that there is too much you have been able to accumulate. That is the way of any exponential equation as you will see from the graph above. Its only after the 15-20th period that the numbers suddenly explode. So staying the course till you hit that 15th period or near about is the key to your financial freedom.

In the long run the stock market in India has given 12-15%. So if you have SIPs going on – then when the stock market crashed couple of months back you would have been able to buy a higher number of units with the same amount of money, which means you would now have a higher number of units on which appreciation will happen when the market goes up. And markets in the long run have always gone up. In India because of higher inflation they have been at 12-15% average while in the US it is lower because of lower inflation.

The same logic would hold even if you have Fixed(term ) deposits. If you have a recurring amount getting deducted to invest in a term deposit, please continue similarly. Don’t let the compounding equation break. You may think you will restart later, but the later never comes…..that’s pure human nature.

So whatever investments you have been able to make, keep them as far as possible so that you are on the continuum to take advantage of the compounding equation

Till next time.

Carpe Diem!!!