If you haven̵
You have probably already checked and are concerned about the money you have lost. This feeling is normal – and probably common. But if you’re wondering what to do with such a turbulent market, there is a simple answer: nothing.
Before taking drastic steps with your investments, you should find out which ones are currently best suited to your finances.
1. Assess the damage
You are likely to panic. It’s not fun to see how your investments wash off in a few hours, days, or weeks. But instead of freaking out, use this time to see which investments are worth keeping and which to drop.
Use this time to evaluate long-term goals. Can you lose more money – even in the short term? There is a possibility that your earnings will continue to decrease. If you need your money for up to a year in the next few months, you may need to move it to a more stable account.
It may be time to cut your losses on some securities and use that money elsewhere. If you need the money, use it. Otherwise, you’re investing in the market again, whether you’re buying stocks or paying dividends, where you get paid every month or quarter.
2. Evaluate your portfolio
Aside from a handful of companies, most stocks are currently suffering. That sounds bad – and so it is for most other things. But for your portfolio, it could be a very good thing – later.
If you have additional cash, invest in stocks that used to be too expensive for you. The strongest companies will most likely be here when the crisis is over. Check out the costs and find out which ones you want to add to your investments.
You may also want to search for companies and industries in which you have not invested. For example, health care and industry could be something to discover.
3. Only redeem equity investments
While your portfolio should already be diversified, it may now be time to think about a conservative move. If you are approaching retirement but are not ready to give up your stock market investments, you should consider more conservative investments. Non-equity investments are things like:
With lower risk investments, you may continue to lose money before making significant profits again. However, you may not lose as much as with much of your money in stocks.
4. Hold it out
It is easy to prevent when investments decrease. But the younger you are, the more likely you are to see a recovery in the stock markets. The 2008 recession lasted a year and a half, but most of them less than a year. (The other exception is the Great Depression, which lasted nine years.)
Since most recessions are short-lived, take a moment to remember that the stock market slump is short-lived. Once you are on the other side, you will see that your investments are booming – maybe even better than before.
5. Liquidate if you have to
While younger people have the luxury of riding it, not everyone can afford it. For one thing, you could be closer to retirement. This means that you cannot afford to take greater risks – including waiting for a rebound that you are not sure will occur before you stop working.
If you’ve lost your job or faced significantly reduced hours (and a lower paycheck), you may not feel comfortable holding your money in the exchange for longer than necessary. Taking out your money is not a bad thing when it is necessary. It is better to cover your costs than to go into debt so that your investments can earn a little more later. If you need it now, use it now. Otherwise, try to interrupt the liquidation. You may find other, safer investments, but if you wait for them, you can make a huge financial profit in the long run.