How to prepare for a stock market crash: What should you do with your investments?
Many economists, including at the Federal Reserve, have predicted a recession in 2023, The Washington Post reported. And during recessions, stocks generally plummet.
Here are four things you should keep in mind if the stock market crashes.
One: Take a breath. Don’t forget that if you sell investments that have fallen, you lock that loss in. But if you hold onto it, you can recover your losses.
Two: Think about the long-term. The market is volatile and goes up and down — but in the long run, it goes back up. It actually gains in about 70% of years, according to NerdWallet. Plus, the stock market return averages 10% a year.
Three: Diversification. Diversification in investing means you mix your funds in various industries and assets — ensuring you don’t put all your eggs in one basket — which helps mitigate risk from investing, according to the U.S. Securities and Exchange Commission. If one investment takes a massive drop, it can be offset by another that performed better, according to Investopedia.
Four: Can you take advantage of it? But before buying the dip, make sure you have an emergency fund, set aside retirement money and have your expenses already covered, according to NerdWallet. And don’t borrow money to invest — especially money you can’t afford to lose.
This story was originally published June 7, 2023 at 5:03 PM with the headline "How to prepare for a stock market crash: What should you do with your investments?."
