3 Steps to Keeping Your Money Safe in a Bear Market | Smart Change: Personal Finance

However, the moves you make now can affect your investments for years or even decades to come. While it is not easy to invest right now, there are a few things you can do to keep your money as safe as possible.

Do your best to keep your money in the stock market during a downturn, if possible. While this may seem counterintuitive, bear markets can be particularly bad times to sell, because stock prices are much lower.

If you initially invested when the market was booming and prices were high, you sell when the market is down and prices are low, you may risk losing money. Also, if you decide to reinvest your money later once the market recovers, you may end up paying a premium on the same investments you just sold.

Of course, there are some situations where you have no choice but to withdraw your money from the market. In this case, try your best to withdraw as little as possible and leave the rest of your investment alone. But if you can swing it, it’s best to avoid touching your investments when the market is down.

When we are in the midst of a bear market, it is normal to feel pessimistic about the future. But the stock market has had dozens of crashes and bear markets in its history and has a 100% success rate when it comes to recovering from them.

In other words, every time the market encounters a bear market, it eventually recovers.

The key then is to try to stay focused for the long term. Nobody – even experts – can say exactly how the market will perform in the coming weeks or months. But as the years go by, it’s very likely that it will come back again. If you maintain a long-term outlook, it may be easier to overcome periods of short-term volatility.

In general, a more diversified portfolio will improve your chances of surviving a bear market. Most experts recommend owning at least 25 to 30 shares from a variety of industries. That way, if one of your two stocks doesn’t get past that downturn, it won’t flood your entire portfolio.

Also, if you are investing in individual stocks, double-check that each one is a solid long-term investment. Companies that are generally in good health have a better chance of surviving downturns, and the more of these stocks you have in your portfolio, the safer your money will be.

Finally, if you are approaching retirement age, it may be wise to start shifting your portfolio toward more conservative investments, such as bonds.

Ideally, you will still keep a portion of your portfolio invested in stocks as this will help your money continue to grow and keep pace with inflation. But by investing more conservatively, your savings won’t be severely damaged if stock prices fall further.

No one knows for sure what will happen with the market in the near term, but the future is more promising in the long term. By continuing to invest, focusing on the long term, and choosing the right investments for your situation, you can easily feel comfortable knowing that you are ready for anything.

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