In addition to the stresses associated with living through a pandemic, Americans are also worried about the stock market crash of 2020. Stocks were at an all-time high in February but hadn’t been doing great since. Luckily, this is not the first time the stock market has crashed, so there are a few tips to help ensure that we learn from the past and don’t repeat it.
- Don’t Panic
Your first instinct is probably to panic. Although it is tempting, resist the urge. There have been three major crashes in the past, and a number of “mini crashes” so to speak in between the big ones. The takeaway here is that the market survived every one of these crashes and reached new heights after each one. It is critical that you set your sights on the long-term goal and remember that at some point, the market has to work it’s way back up.
- Expect Income Disruptions
If the stock market makes it to the point of a recession, income disruptions are more than a possibility. Experts are pretty sure a recession is coming, so it is best to be prepared. Whether you are an employee or an employer in the American workforce, this will mean a change in daily life. You could be facing a layoff or facing the decision of who to lay off in your business. The short-term solution is to have an adequate “cash cushion” if possible. This alleviates the stress of not having a job while searching for a new one. Although it is important to think about how much money you need. Experts are suggesting three or four months of expenses at the minimum.
- Be Ready to Buy Again
The best way to make up for the losses of the market crash is to get back in the game. This means that you need to be building up cash to buy stocks as the market decline slows. This will allow you to make up what you lost on the crash and maybe even help with the employment situation. Experts suggest investing in increments instead of all at once since no one knows when the market will hit bottom. This increases your chances of the best investment.