Markets fall. Sometimes by 10%. Sometimes by 30%. Occasionally by more. This is not a sign that investing is broken. It is a normal part of how markets work.
Every major market crash in history has been followed by a recovery and new highs. The investors who lost money permanently were the ones who sold at the bottom.
In March 2020, the MSCI World Islamic Index fell approximately 28% in six weeks. By December 2020, it had fully recovered and closed the year up roughly 15%. Investors who sold in March locked in their loss. Investors who held — or kept buying — recovered everything and gained more.
What to do when markets fall
- Do nothing. Your long-term plan has not changed.
- Keep your monthly direct debit running. Buying during a fall lowers your average entry price.
- Do not check your portfolio daily. Watching the number fall daily is emotionally damaging and leads to bad decisions.
- Remind yourself: you only lose money if you sell. On paper, the drop is temporary.
What not to do
- Do not sell to "wait for it to stabilise." Markets recover unpredictably. You will miss the recovery.
- Do not move to cash. Cash loses to inflation.
- Do not check financial news constantly. It is designed to create anxiety, not to help you make better decisions.
Islamic finance requires real risk — the possibility that your investment can fall as well as rise. A market drop is the very thing that makes halal investing permissible: you are sharing in genuine economic uncertainty. The prohibition of riba exists because interest eliminates risk for the lender. Accepting volatility is not just financially wise — it is theologically consistent.