5 investing basics that may help you digest volatility in the stock market

A study of Nifty data from June 1997-June 2022 shows that staying invested on all days in the market is the best thing to do. "By missing just a few of the market’s best single-day advances, you could put a real crimp in your potential returns," Franklin said, adding that many investors are slow to recognize a retreating market, and many others fail to see an upward trend until after they have missed opportunities for gains.

By committing a fixed amount of money at regular intervals, you end up buying more units when prices are low and fewer units when prices are high, and over time, your average cost per unit may be far less than the current price per unit. "While you may not see the benefits in the short term, continuing SIPs over longer time frames and across market cycles helps in the objective of wealth creation," Franklin said.

For long-term investors, it is important to stay away from all the noise related to events that may affect stock prices in the near term. Franklin said it is historically proven that market fluctuations and volatility are generally transient in nature with a probability of getting ironed out in the long run.

To benefit from the power of diversification, you must not put all your eggs in one basket. Winners keep rotating and no particular asset class has consistently delivered the best relative returns.

Most investors already know that the best way to navigate a choppy market is to have a good long-term plan and a well-diversified portfolio. So what stops them from creating wealth? It is nothing but a behavioural gap which makes us doubt our beliefs and believe our doubts.