How to prepare for the coming stock market crash

How to prepare for the coming stock market crash

Posted: omggga On: 25.06.2017

No need for panic. I am absolutely not saying a crash is right around the corner. But big, scary declines are standard market events that happen, on average, about once a decade. Crashes I have invested through include: You may be tempted to do much more than this, but here are five steps to keep you on track and moving forward.

There are also very bad behaviors that can turn a market crash into a personal financial catastrophe. These beliefs and actions are quite common in the heat and chaos of a crash and are very dangerous to your financial health.

Three of them are:. Remember, never take investment advice from someone who predicts the future.

how to prepare for the coming stock market crash

That includes fortune tellers, grandmas and others. Crashes are ugly, brutal, nasty and can create anxiety.

Moreover, the social and human cost of crashes is significant and is not to be ignored or downplayed. A crash in some major market should be expected—someday—but not feared.

By following the steps above—before, during and after—you can get beyond a crash in better shape than you entered it. For more from this author, see: Is a Robo-Advisor Right for Your Investments?

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Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund. Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You. Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam.

Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Four Market-Crash-Tested Benefits In a financial panic, the benefits are often overlooked. Lastly, you get to feel smart about keeping yourself risk constant while most investors are zigzagging like scared rabbits.

For related reading, see: Investing in Crisis, a High Risk-High Reward Strategy.

What Is a Market Crash? First of all, what do we really mean by a crash? It happens in a major market Russia is not a major market. Real estate, currencies and commodities can too. Also, a crash also has to last for awhile. Remember that diversification by time, type and geography are your best friends. When one kind of security craters, another may be going straight up. Stay risk-constant by rebalancing as markets throw you way out of line.

That means if stocks tank, rebalance by selling other asset classes and buying more stock. This practice ensures you will be buying on the way down and at the bottom bragging rights. Harvest and stockpile tax losses, and there can be plenty of them. They can be carried forward to future years, so harvest heartily.

how to prepare for the coming stock market crash

It took 17 months to get through the crash. Long-term thinking and action are valuable during a crisis. Are my investments consistent with my goals? Are my rules written down somewhere? How will I have the patience to get through it? Have I had all my crash-related questions answered before one happens?

Prepare Your Portfolio for a Stock Market Crash

Do I have comprehensive reporting of all assets and accounts, regardless of investment location? Are my assets held at an independent custodian? What NOT to Do Before the Next Market Crash There are also very bad behaviors that can turn a market crash into a personal financial catastrophe.

Three of them are: Believing you can predict an unknowable future by trying to time the market or pick stocks Skewing your investments in preparation for something that may not happen for a very long time, if ever Positioning yourself to benefit from consequences that may not happen, no matter how plausible they sound Remember, never take investment advice from someone who predicts the future. Short-Term Pain, Long-Term Brain and Gain Crashes are ugly, brutal, nasty and can create anxiety. Osbon, John Boston, MA.

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