In any market, there will be ups and downs. However, when the market takes a downturn, it could be easy to get caught up in the chaos and lose sight of your goals.
So, how do you stay sane during a market crash? Read on for our tips and tricks.
8 Tips to Stay Sane During a Market Crash
A market crash could be a traumatic experience, even if you’re familiar with them. After all, nobody likes to see their investments decline in value, especially when that decline is steep or fast.
In this article I will help you learn how to stay sane during a market crash.
While it’s natural to feel shaken during a market downturn, there are some things you could do to keep yourself feeling calm and centered throughout this trying time.
We’ll discuss a few tips for you below:
Keep Your Perspective
A market crash is not the end of the world; it happens regularly and typically doesn’t last very long.
In fact, bear markets, which are defined as short periods of sustained losses across many different asset classes, don’t tend to last very long – about 13 months on average.
So, despite the short-term pain, remember that this will likely be a temporary situation, and there’s still time to recover your losses when the market recovers.
Take Some Time Away
Many financial professionals advocate regularly reviewing your portfolio as a way to keep yourself on track with your investment goals.
But if you continually watch stock prices decline and feel stressed out about it, it could be beneficial to stop looking at your investments for a while.
Taking time away could help you calm down and avoid making rash decisions based on emotional impulses.
Stick To Your Long-Term Plan
It may be tempting during a market crash to make changes or adjustments in an attempt to “time” the market.
This could mean buying on dips, selling when stocks rise to capitalize on the trend, or otherwise making changes based on what’s happening in the marketplace at any given moment.
While market timing could be smart if you’re skilled and experienced enough to do it correctly, most investors are probably better off sticking with their original long-term plans.
Remind Yourself Why You Invest
Many of us have our own reasons for investing – whether that be setting money aside for retirement, a child’s college education, or some other goal.
So even during a market crash, it could help to keep those goals in mind as a reminder of why you’ve invested in the first place and continue making regular contributions, which will go much farther than trying to time volatile market highs and lows.
Avoid Borrowing Money to Invest
Borrowing money to invest is generally not a wise idea, even in times of market growth. It’s especially ill-advised during a downturn.
If you have to resort to borrowing money to invest more, you’re probably already feeling the effects of stress and anxiety – both of which could impact your ability to make good decisions.
Look at This as an Opportunity
If you’ve been following a consistent investment strategy that aligns with your financial goals and making regular contributions over time, any stock market crash will likely represent a great buying opportunity for many of the securities and assets in your portfolio.
Again, this doesn’t mean trying to predict short-term highs and lows.
But if you’ve done your due diligence and are invested in solid, well-managed companies, you’re likely to see many of them at much better prices than you would have six months or a year ago.
Check for Alternative Investments
If you’ve already taken advantage of the buying opportunities during a market crash and are still feeling anxious, it could be helpful to look at alternative investments.
These could include things like real estate (either privately owned properties or properties that you could invest in through a REIT), precious metals, artwork, or even investments in other companies outside your asset allocation.
Filter the Noise
While stock market crashes could be stressful, they’re inevitably broadcasted in the media.
This means you’ll hear a lot of news and commentary about what’s happening – experts telling you to buy and sell certain stocks or negative headlines in general.
Filtering this noise could make it much easier to stay calm and not make investment decisions based solely on fear.
Much of the content being shared on social media these days tends to focus either on sensationalism or on vague advice with no real-world applicability.
Tune out the news for a few hours and focus on something else as much as possible. It could help you regain perspective during these times.
Final Thoughts
Most people think that market crashes are the worst possible time to invest.
However, if you know how to stay calm and take advantage of the opportunities a market crash offers, you could actually increase your wealth during these chaotic times.
By following the tips in this article, you’ll be able to stay sane and make smart investment decisions when the next market crash hits.
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