Investors would like to get bang for the buck. This gives rise to ‘behavioural finance’ issues e.g. chasing an asset class giving the highest return. Till sometime earlier, equity was recovering and gold rallying. Now, equity is correcting and gold lost some lustre. Investors are wondering, what to do. Stay calm and do not be hasty. Let’s look at three asset classes before coming to action.

Equity is growth asset and the preferred asset class to grow wealth over a long period of time. However returns are less stable than debt. As equity prices rise, valuations get stretched leading to corrections in equity market. People tend to think of 10% fall in equity prices as correction. Equity guru Warren Buffet said if you cannot tolerate a 30% price fall don’t invest in equity.