Summary: The coronavirus outbreak continues to wreak havoc. There is no cure yet and the number of people getting affected is increasing.  World economy has taken a significant hit. Markets are down. Though it is easier said than done, retail investors should not panic. Long-term investments should be kept as-is. You should take steps to manage your budget and income so that there is minimal upheaval in case of a layoff or business or profession slowdown.

The DOW Index dropped 3,583 points in the last week of February. The Sensex fell by more than 5500 points between Feb 11, 2020 and March 11, 2020. Business activities are subdued globally. The coronavirus effect is increasing as the days go by. There is no cure yet and there are fears that the global economy will go into a depression because of production slowdown, reduced commercial activities and decrease in consumer spending.

What does the retail investor do in this pandemic situation?
It is scary to see your investments losing value. But long-term investors have to sit tight on their investments. 

1) You should understand that systematic risks and cyclical movements affect the entire market. Moreover, it is difficult for the market and your investments to constantly be on the upward trend. Today markets are interconnected more than ever. So for example, a slowdown in China or a political issue in the US will affect the Indian markets to some extent.  If you look at past events, SARS, bird flu and Ebola were worldwide medical emergencies. The SARS outbreak led to the Sensex being in the red for the one month period. Six months later it was up by over 30%. The Cholera outbreak in 2010 affected the Sensex significantly. But 10 years later, Sensex is valued at close to double the value of Sensex then. 

Keep a watch on your portfolio. Investments that have been made for the long-term on the basis of proper research and analysis should be kept as-is. 

2) The market has fallen quite a bit. It will be tempting to buy cheap stocks or invest in mutual fund schemes. You have to be patient. The markets are still in turmoil as there is lot of uncertainty. Check which of your investments have the potential to bounce back and offer sound value for the price. 

For example, you can increase your SIP amount in large cap growth funds and maybe temporarily cut back on investments that you think will be affected negatively for a long-term. Do make these choices based on your risk profile and investment capacity and goals.

3) Since business is experiencing a slowdown, there might be layoffs in companies. If you are a professional or freelancer, you may experience slowdown in projects or even loss of projects. This can affect your income. Do not panic. 

Take steps to manage income and budget and use the emergency funds wisely. Control your expenditure. If you feel that you will not be able to pay off your EMIs on time, check with your bank on how best to manage them. You can restructure the loan. If you have a good payment history, you may be able to defer the payments for a certain period. If you have received a severance package, you may prepay the loan to reduce EMIs. Utilize the opportunity of less work, to upgrade your skills. If you run a business, it is a good time to revisit client acquisition strategies and marketing plans.