How to Navigate a Stock Market Crash

Many people ask themselves how to react to a stock market crash? Especially during periods like these, it is important to stick to your investment plan.

Invest Money You Don’t Need Short-Term

When you’re investing your money, that means you’re putting money away in the market today so that you have more money later. If you expect to need money in the short term, you don’t invest it in the stock market but you start building your emergency fund.

Your Age Plays A Role In This

When you’re young and you don’t need the money you’re investing any time soon, you can take a little more risk. Your working income will cover your costs, so that money can be used to cover your monthly bills.

Time In The Market Beats Timing The Market

The fact that a market correction will occur is certain. The thing is, no one knows when it will happen or how much the correction will be.

Trying to time the market is such outdated financial advice. If you missed the best 10 days of the stock market between 2004 and 2019, your return will be an average of 4.11% instead of an average of 9%.

How To React To Stock Market Crash?

First I want you to realize that it’s very normal to have these kinds of corrections. When the stock market does not reflect the value of the underlying companies, a correction is needed in order to get to the highs again.

Second, keep in mind that stocks will go up over time. These companies are a representation of the economy, that will keep growing and growing.

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