This time is no different if you have a financial plan and discipline

Amid market fears and economic uncertainty, disciplined asset allocation and long-term financial planning remain investors' strongest safeguards

Rajpal, a client, reached out to me saying, “I am reading many articles on my social media feeds warning that dark days are coming for the Indian economy.” He was also worried by the Prime Minister’s call for austerity. Rajpal’s basic question was: Should investors treat this crisis as different? 

I told Rajpal that nobody can predict the future, and recoveries from past crises do not guarantee a similar outcome this time. That is why the familiar regulatory warning says that “past performance is no guarantee of future results”. But history remains a useful input, especially when combined with a financial plan built for uncertain times. 

Rajpal’s investments are designed for such periods. His next three years’ requirements sit in safer investments. The rest is in Indian stocks (55 per cent), United States (US) stocks (20 per cent), gold (10 per cent) and fixed deposits (15 per cent), periodically rebalanced. This combination has delivered double-digit returns in any 10-year period since August 13, 2001. His plan is designed to meet goals over different time horizons, not to maximise returns every year. Like a marathon runner, Rajpal does not sprint to win each kilometre. His pace is set by the distance he has to cover. Investors without such segmentation may naturally ask whether markets are signalling unusual danger. 

The Nifty is at 23,719, about 10 per cent below its all-time high of 26,373 (January 5, 2026). The market already knows about the war, energy and shipping risks, and the austerity signal. Despite this, the fall is within normal annual volatility and far from a bear market. From here, worsening developments could push markets lower, while even partial improvement could trigger recovery before full normalisation. Nobody knows how either will play out. 

Covid is a useful reminder of this uncertainty, not because today’s crisis resembles it, but because market reactions are hard to predict. By March 23, 2020, the market had fallen 38 per cent from its all-time high. On March 19, 2020, six days before the lockdown, I wrote in this column (bit.ly/410VPZB) that investors should maintain equity investments and, where appropriate, increase equity exposure systematically. That advice worked well, although I had no way of knowing this then. The markets recovered fully and touched new highs in November 2020, when the vaccine was still unavailable, and continued rising even after the brutal second wave hit in April 2021. The lesson: Market reaction cannot be predicted based on the visible crisis alone. 

The present crisis is different. Infrastructure damage is different from pandemic-triggered  disruption. It is physical and slower to repair. Investors imagine second-order damage more easily than improvement. But history suggests both are possible. Markets may price in a pause in escalation, reopened shipping routes, supply substitution or policy responses well before full normalisation. Crises can also force difficult reforms: India’s 1991 foreign-exchange crisis triggered liberalisation 

that transformed the economy. That is the market side of the story. How the individual investor experiences a crisis is another matter entirely. 

Unlike 2020, social media has a much larger role today. It adds a layer of anxiety to every crisis. Algorithms pick up a user’s initial fears and keep feeding back similar content, making the crisis feel larger and more certain than it is. This one feels different, too. But that does not mean the investment discipline has to be different. 

Truth be told, discipline is simple, but not easy. Once short-term needs are protected and long-term money is linked to a pre-decided asset allocation, the plan should guide the response. Do not sell out of fear or buy aggressively in excitement. If market falls create room within the planned asset allocation, faster deployment can be considered. Most crises require only one of two responses: rebalance if required or otherwise sit it out. Rajpal’s plan has already done this job for him. But those without such a plan should make one as soon as possible. You do not dig a well when you are thirsty. You dig it in advance. In investing, that well is a financial plan. 

The writer heads Fee-Only Investment Advisors LLP, a Sebi-registered investment advisor; X: @harshroongta