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Here’s How to Overcome Market Volatility

Updated on :  

08 min read.

Market volatility is nothing but market movement due to various factors, which are not our control. Market volatility is the only constant that comes with equity-linked investments. One shouldn’t be afraid of market volatility, as there are various strategies to overcome market volatility. In this article, we have covered the following strategies:

Do not pause or stop your SIPs

It is not a wise move to stop or pause your systematic investment plan (SIP) just because the markets have entered a bearish trend. You have to understand that market movement is part and parcel of equity-linked investments, and you have to embrace it. If you continue your SIP when the markets are down, you purchase more fund units as their price falls. 

You get the benefit of it when the markets start gaining. If you stop your SIP, you will miss out on the opportunity to purchase the fund units at a lower cost, thus giving up on the opportunity to realise gains in the long run. Therefore, instead of looking at bearish markets as a negative factor, you must pick up more fund units by continuing your SIP. You may also consider bumping up the ticket size of your SIP. 

Never make impulsive decisions

It is never advisable to make impulsive decisions. Your investment decisions will have to be based upon your investment objectives. You have to trust the market and the fundamentals of the companies you have invested in and do not give room for knee-jerk reactions. The bullish or bearish market trends are never permanent, and they will always be fluctuations. 

You have to trust your investments and stay invested for the long-term. You may consider exiting your holdings only if you feel that your investment objectives are not being served. If needed, you may consult a financial advisor who would help you redraw your investments such that your objectives are met at the levels of risks you are willing to take. 

Diversify your portfolio

Concentrating your investment towards a particular sector or stock is the last thing you want when the markets have gone volatile. When you have concentrated your investments, there are high chances that your losses would be pronounced when the markets are down. 

To avoid that, you should diversify your investments across various stocks and sectors. However, you should note that you don’t diversify your portfolio too much as it may become tedious to track all your investments at once. 

Invest across asset classes

The best way to diversify your portfolio is by investing in various asset classes. You have to diversify your portfolio by investing in equities, debt, government savings schemes, bank deposits and gold. You may also consider real estate, but you will give up on liquidity as it may take a long time to sell your real estate holdings. To determine your equity exposure, you may follow the rule of 100 minus age. For example, if you are aged 40 years, your equity exposure may be up to (100-40)%, 60%.

Have a long-term investment horizon

Having a long-term investment horizon would address most of your concerns related to the markets being volatile. It is advisable to have an investment horizon of longer than five years to invest in equity-linked securities. 

When you invest with a longer investment tenure, you let your investments go through business and market cycles, which helps your investment in providing stable returns in the long run. 


Market volatility is something that will remain constant with your equity-linked investments. Having a longer investment horizon and diversifying your portfolio across market sectors and asset classes will help you ride the market volatility and earn good returns in the long run. 

Related Articles:

Difference between risk and volatility

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