Three Strategies to Withstand the Bear Market
Uncertainty is the only certainty, according to John Allen Paulos. Based on historical stock market returns and the volatility we’ve experienced this year, I’m inclined to agree. While we may not have been able to foresee the specifics of this situation, the good news is that we can continue to plan and prepare for extended periods of market downturns while waiting to take advantage of the recovery. We’re investing for the long run, which means now is still not the time to panic. Here’s what you can do right now:
Treat your portfolio with care. Instead of selling out of the market or making emotional decisions, now is the time for careful changes, seeking out opportunities, and adjusting goals if the volatility is keeping you up at night. If you’re worried about your investments, reach out to a professional for a financial check-up.
Revisit your emergency reserves. If you’re worried about loss of income this year, make sure you’ve got enough to avoid tapping your long-term investments ahead of schedule. A trusted advisor can help you identify your first, second, and maybe even a third source of cash if you think you’ll need it.
Build flexibility into your approach. We don’t know when the stock market will return to normal, but we can think about your plan A, plan B, and even plan C for 2022. This kind of contingency planning is a great way to fight anxiety and build inner calm.
P.S. For those of you who enjoy podcasts, my friend Caitlin and I recorded a longer discussion about investing in bear markets on our Women on the Verge of a Financial Breakthrough podcast (heads up, there is a little bit of adult language).