THE DAILY ENCRYPT

[date-today format='F j, Y']

What I’m doing TODAY to prepare for a stock market crash

A stock market crash might be on the way. Here are three things to do right now to prepare. The post What I’m doing TODAY to...
blue and white floral textile
Photo by Uriel SC

Statistically, the stock market goes through crash (a drop of 30% or more) once every 12 years. And every time the stock market goes through one of these, it recovers over time. That means that, as an investor, I probably don’t need to worry much about the market crashing. It’ll probably happen at some point, but things will likely work themselves out as long as I concentrate on making sensible investing decisions.

That said, there are some things that I can do right now to prepare myself for a stock market crash. The first is making sure that I have a long-term focus. The second is keeping enough cash on hand so that I’m not forced to sell my investments at the wrong time. The third is focusing on my investments as businesses, rather than stocks. All of these are things I can do today to prepare for a stock market crash.

Long-term focus

After every stock market crash, there has always been a recovery. This means that, if I can wait long enough after a crash, I’ll be okay. Ultimately, if I buy Unilever shares today at 3,440p and sell them after 20 years at 4,800p (collecting dividends along the way), it doesn’t matter what price they traded at in between. Whether they went in a straight line from 3,400p to 4,800p or whether they fell to 1,670p and then made their way back up, the end result is the same. Keeping a long-term focus means not worrying about a stock market crash because the prices in the short term don’t matter.

Securing personal finances

In order to maintain a long-term focus, I need to make sure that I’m not forced to sell my shares any time soon. I need to be in a position such that I have enough cash available to get me through whatever happens in the near future. If I don’t do this, I might have to sell an investment at a low price to pay for something immediately. In that situation, a stock market crash would give me a problem. In other words, having an emergency fund prevents this and allows me to not worry about the price of my shares because I don’t need to sell them.

Focus on businesses

The third thing that I can do to prepare for a stock market crash is focus on owning businesses, rather than stocks. This means measuring the return on my investment by how much the company makes, not how much the stock moves. For example, with British American Tobacco, the company’s stock is down from where it was 10 years ago. But the company has increased its earnings per share over that time. A market crash is just a reminder that share prices don’t always follow business returns perfectly. By looking to the underlying business, rather than the stock, for my investment return, I can see that a stock market crash is just a temporary issue.

I don’t know when a stock market crash will come. But whenever it does come, I’ll be prepared.

The post What I’m doing TODAY to prepare for a stock market crash appeared first on The Motley Fool UK.

Inflation Is Coming: 3 Shares To Try And Hedge Against Rising Prices

Make no mistake… inflation is coming.

Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.

Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.

That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…

…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!

Best of all, we’re giving this report away completely FREE today!

Simply click here, enter your email address, and we’ll send it to you right away.

More reading

Half of savings accounts fail to beat the base rate: here’s why savers should consider a stocks and shares ISA
2 cheap shares to buy now with 4%+ dividends
5.4% dividend yield! Is this one of the best UK income shares to buy today?
The Cineworld share price is rising! Here’s what I’m doing now
I’d buy this FTSE 100 share on the dip in this market correction!

Stephen Wright owns shares in Verizon. The Motley Fool UK has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

admin

admin

admin

admin

© 2022 The Daily Encrypt. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Latest News
PRESS RELEASES