Money Monday: Markets Crash -But What We Do Next Is What Matters

It's every investor's worst nightmare...

You put your hard-earned money into the stock market...

And suddenly, it all comes crashing down 😱😱😱

You feel cheated -- like everyone else polished off the dessert and you didn't even get a bite -- but more than that, you're scared, wondering if you'll get your money back...and how long it'll take to recover.

The good news is that if you maintain a long-term perspective, a stock market crash is just a blip on your financial journey.

Here are some need-to-know tips for weathering a bear market...

1) Stay calm.

Downturns are a normal part of the economic cycle. In the same way that a storm eventually passes, markets, too, recover and rebuild.

This is when working with a financial professional is so important. You want someone who is unemotional to help you make financial decisions.

2) Avoid panic selling.

This could be the biggest mistake you can make during a market downturn! Selling in a panic can lock in losses and stop you from benefiting when the market eventually recovers.

Historically, the stock market has experienced losses of 30% or more approximately every ten years, and each time, it has recovered to eventually hit new all-time highs.

Steadily and consistently buying into the market as stock prices go down offers an opportunity to reap huge rewards when the market eventually recovers.

3) Bolster your emergency fund.

Without an emergency fund, you might be forced to sell your investments at a loss during market downturns to cover immediate needs. An emergency fund offers peace of mind, ensuring you can ride out financial storms without disrupting your long-term investment strategy.

4) Diversify or rebalance your portfolio.

If you have a concentrated portfolio, the crash might be a good time to diversify. Having a mix of asset classes (like stocks, bonds, and real estate) can help reduce risk. If your portfolio has become unbalanced, consider rebalancing your asset allocation to fit your risk tolerance.

5) Look for opportunities.

During a crash, stocks may become undervalued. This could be an opportunity to buy at lower prices if you're in a position to invest and have a long-term perspective.

It's completely natural to feel shaken during times like these, but it’s important to remember that market crashes are NOT the end of the story. They’re a normal part of the journey.

With a healthy investor mindset, you can rebuild stronger than ever.