Your portfolio is down 10-15%. Headlines scream about war, oil at $100, and markets crashing. Your instinct says “sell everything.” That instinct is wrong. Here’s exactly what to do — and what NOT to do — with your investments during the current Iran-Israel-US crisis.
Rule #1: DO NOT Stop Your SIPs
This is the single most important piece of advice. SIPs during market crashes are when you build real wealth. Here’s why:
- Your Rs 10,000 SIP that bought 50 units at Rs 200/NAV now buys 59 units at Rs 170/NAV
- When markets recover (and they always do), those extra units compound massively
- Investors who continued SIPs during COVID crash (March 2020) generated 40%+ returns by March 2021
- Investors who paused SIPs in panic missed the recovery and locked in losses
Rule #2: DO NOT Panic Sell Your Mutual Funds
Check your fund’s category and time horizon:
- Equity funds (5+ year horizon): Sit tight. A 15% drawdown is normal even without geopolitical events. Your SIP will average down automatically
- Balanced/Hybrid funds: These are designed for exactly this situation. The debt portion cushions the fall. Hold
- Debt funds: These are likely gaining value as bond prices rise (yields fall in risk-off). Don’t touch them
- Sector/thematic funds: If you’re in a sector fund that’s fallen 25%+, assess whether the sector thesis is broken or just delayed. Energy, defence, and gold funds are actually benefiting
Rule #3: Assess Your Stock Holdings
Unlike mutual funds where the fund manager manages risk, individual stocks need your attention:
- Quality large-caps (HDFC Bank, TCS, Reliance): Will recover. Hold or add on 10%+ dips
- Leveraged companies with high debt: If they have dollar debt and rupee is crashing, these could face real stress. Review carefully
- Small/mid-caps down 40-50%: Check if the business is fundamentally sound. If yes, hold (but don’t average down yet). If the company has weak financials, consider tax-loss harvesting
Rule #4: Deploy Cash Strategically
If you have surplus cash, this is a golden opportunity. But don’t deploy all at once:
- Invest 25% now into Nifty 50 index fund or top 3 large-cap stocks
- Keep 25% ready if Nifty falls another 5%
- Keep 25% for a potential Nifty 20,000 scenario (worst case)
- Keep 25% in liquid fund as emergency reserve
Rule #5: Tax-Loss Harvesting Opportunity
If you have stocks or mutual fund units sitting at a loss, consider selling and immediately rebuying (for stocks) or switching to a similar fund (for MFs). This books a capital loss that can be set off against future capital gains, saving you tax. The loss can be carried forward for 8 years.
What NOT to Do
- Don’t sell your long-term equity holdings to “buy when it’s lower” — timing the bottom is impossible
- Don’t move everything to gold — gold is already at all-time highs and carries its own risk
- Don’t take leveraged positions (F&O, margin trading) to “average down” — this is how accounts get wiped out
- Don’t check your portfolio every hour — set a weekly review cadence and stick to it
- Don’t listen to WhatsApp/Twitter “experts” predicting Nifty 18,000 or 15,000 — nobody knows the bottom
Remember: Every major market crash in the last 30 years — 2000 dot-com bust, 2008 financial crisis, 2020 COVID crash — was followed by new all-time highs. The question isn’t whether markets will recover, but whether you’ll still be invested when they do.