Since President Trump took office a little more than a year ago, the stock market has been somewhat of a conundrum. Initially it was all good news, as the market reached high-water marks never seen before. However, lately it has been a rollercoaster ride, with big swings both ways.
Of course, the market will always fluctuate, but should these latest steep climbs and deep falls be cause for greater concern? Is it possible that the market is headed toward another crash? Should you start protecting your assets? Should you sell everything off in the name of saving your retirement fund?
You Can’t Plan for a Crash
When the market has crashed, inevitably it has always rebounded. The problem is you never know exactly when a crash is coming. That can lead to huge losses of wealth. In some cases, people can lose their entire savings or retirement funds. So, the real question isn’t whether or not the market will crash. The real question is what should you do to prepare for it.
There are some financial experts that are already warning of a crash, while others believe the market will steady and find stable ground. In any case, the best thing you can do as an investor is to hope for the best, but prepare for the worst.
How to Prepare for a Crash
Preparing for a crash has many different looks, but here are a few suggestions that could prove very valuable if the market does crash.
Diversity–one of the best ways to overcome a crash is to diversify your assets. In other words, if you put all your eggs in one basket, you’re much more likely to take a major hit if the market crashes. By investing in several different stocks you have a better chance of weathering the storm.
Know Your Assets–how well do you know your stocks? This is important because any stock is subject to having a bad day, so to speak. So, is your stock really a stinker, or is just suffering a temporary fall? If you know your stocks inside and out you’ll be able to judge whether or not to sell or hold.
Seek More Advice–just like when you have a medical diagnosis, it’s always a good idea to get a second opinion with the stock market. There could be completely different opinions on the same stock, so make sure you ask around and get the whole picture before making any major decisions.
Don’t Stop Taking Risks–not everyone likes the same level of risk when it comes to investing. However, you need to remember what your risk level is and stick to it. In other words, don’t stop doing what brought you success in the first place. Crashes are bad, but the market has always bounced back and sustained long-term growth. Don’t just automatically jump ship when things go south.
Be Ready to Buy When it Comes Back up–if you have the money to do it, be aggressive during the crash. Many fortunes have been made by savvy investors who have pounced when prices dropped, only to be rewarded after the market steadied.
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