Five Tough Time Financial Fixes
When the markets are in a tailspin and running unpredictably it’s really hard to keep your financial house on course. The following are five things that you can do in order to ride out any storm and keep yourself on track.
You Should Ride the Waves, When the Surf Is Up
When there are dramatic turns in the market place, one is able to take advantage of these ‘dips’ and buy. Doing so allows one to acquire more stock with less money. So make a move into the markets for stocks which you’ve assessed as from solid companies but trading low due to overall market conditions.
For example if you say put $500 into a stock fund for your 401(k) every month and the market is down on your payday then you’ll be so happy as you’re going to get more shares for your money than if the market were say up in the clouds. It’s pretty much like you go shopping and find out that everything that you want is on sale. This is a long term investment so don’t worry about when the market is low and you’re investing, ride the waves.
Buy Low, Sell High
Most of us inherently want to invest in winners. Nobody wants to be part of loosing company. However, the reality of investing is that one has to look at over all trends. For example if real estate and bonds have been going up and up one might have to decide to get off of this track and back into some other stocks which have potential for growth.
Is real estate going to go up higher? It’s possible but it’s highly unlikely that you’re going to see a strong surge that’s similar to what’s happened in the past. Real estate is going to level off and stocks are in a very strong position for recovery. When it comes to the long term the stocks really provide you as a long term investment strategy.
Don’t Run For Cover
When faced with market volatility it is really a time to bunker down and hold on to your positions. As a long term investor one has to appreciate that when markets do turn back up, stocks often make a sharp up turn and a full recovery. Therefore, selling during a rough time is not the plan. One has to hold their position and understand that they are playing out a long term plan.
Long term investors do not throw in their chips when the markets turn sour. Once in, it is better to be part of the eventual return of the Bull market to have avoided the Bear. Back in 92-01 the S&P 500 had a 175% return on investment. All those that bailed out on their investment missed out on these heady times where it was almost like discovering free money.
Stash Your Cash
You don’t ever want to be cash poor and have to sell off your assets when it’s time to fund your needs. A bear market will rarely last for anything more than a three year period so you should keep that same amount of money in liquid funds. If you need to have some cash to supplement your income, buy a house, or send your child to school within a year or two to three then you should stay in liquid money market accounts or CDs. In order to pay for your short term needs you should make sure that you’re more concerned with the return of your money rather than on your money itself.
Stop, Look, Listen
Ultimately, you need to stop worrying. You need to assess your position and then listen to the advice of a trusted financial adviser who will help you create a strong financial plan. Following this plan will get you back on track and moving towards the future you are envisioning.
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