Is anyone else worried about another stock market crash? If you’re worried, are you doing anything to prepare?
Ever since last March, I’ve gotten a lot of questions from readers about how to prepare for the next market crash. Here’s a question I got from a 28-year-old man wondering if he should cash out his $100K worth of investments in preparation for a crash. https://www.thepennyhoarder.co…-cash-out-of-stocks/
It may seem obvious NOW that this isn’t the right decision. But I was terrified when the stock market crashed back in March 2020! I didn’t withdraw any money and I even made myself invest a bit more, but I have to admit that was hard because no one had any idea just how much worse it could get.
The main thing I’m doing to prepare for another crash is that I keep adding to my emergency fund. It’s not always easy, but at least I know I won’t have to sell investments at rock bottom (and pay early retirement withdrawal penalties) if I need money right after a crash.
I haven’t really changed anything about how I invest since March 2020, but I’m 38, so my money has time to recover if the market crashes again. I’m happy to say that my mom, who’s nearing retirement, shifted to much less-risky investments after the market recovers. Her returns haven’t been as high, of course, but her retirement money is much safer.
If you’ve taken any steps to prep for a stock market crash, I’d love to hear! Have a great weekend, Penny Hoarders!
I read your advice and read his question(s) about what to do if the market crashes again. You’re correct. I’ll use myself as an example of what I went through. I bought a house in February 2020, I was at home March 23rd, 2020 the day the stock market TANKED, I am like ****, what should I do, sell and take a percentage tax hit, nope that won’t happen to me. Get another loan, nope. Take the cash I have on hand and double down on some of my investments, BINGO. So with what money I had on hand to use, I bought more stocks of quality companies that I already own in my 2 ROTH IRAs and my 1 open trading account. Long story short answer my accounts went from $114,000 down to $52,000 (rounded off) and 15 months later up over $128,000. Yes, dividends were cut, some raised their cut dividend up and some did not. In March 2020, I was 56 years young and now I’ll be 58 years young in October this year with ten months to go before I retire from my U.S.Government job. Yes, I’ll get a monthly pension check and free health insurance for life. Also, my final house payment was made on August 5th, 2021, yes I doubled payments to pay it off.
If the stock market tanks again, so be it. It will recover once again and if it does tank I’ll buy more stocks as I’ll have more cash monthly seen as there is no longer a house payment to make. I have been playing/gambling in the stock market for more than 25 years. I did all of this as a single male with one income and went to work every day I was required to work as there was no shut down for us. Yes, I’ve lost money and made money. Everything above is true as of today August 6th, 2021.
I plan to retire in 9(ish!) years, and most investments were moved from high risk to lower risk, after the market recovered. Kept a smaller amount in the high risk and move that over as I am comfortable. I don’t have much of a risk tolerance. I continue to funnel money to my emergency fund.
I really don’t enjoy ‘playing’ the market and would just a like a few million in cash ?.
Am I worried about a market crash? Not at all, since I normally just do safe, automatic investing with dollar-cost averaging. And since I normally hold for a long period of time, it doesn’t matter too much if it goes up or down or sideways to me.