At this point, it’s painfully clear that stocks are in for a prolonged slide. last week, the S&P 500 index sank into bear market territory. And other major indices are also down significantly so far this year.
A stock market downturn has the potential to turn your head upside down in a very big way. So a good bet right now is not Check your wallet balance every day. If you do, you’ll likely be discouraged at the very least. And what’s worse, you may be tempted to sell investments in a panic, thereby locking in otherwise avoidable losses.
But while checking your portfolio daily isn’t a good use of your time or energy right now, there are some steps worth taking given the state of the stock market. Here are a few that are worth addressing.
1. Evaluate your savings
During a stock market downturn, you only lose money if you liquidate investments when their value has gone down. And having adequate cash reserves might make that not something you have to think about.
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That’s why it’s a good idea to review your emergency fund and make sure it’s up to date. Remember, living costs have gone up these days due to inflation, so while your savings previously may have been enough to cover three months’ worth of bills, now they may only be enough to cover two and a half months’ worth. .
If you’re not happy with your level of savings, do your best to filter more money into your emergency fund in the coming weeks. We do not know how long this current bear market will last, but it is important to have a good cushion in the bank, in case it continues.
2. Make a wish list of the stocks you want to buy
Bear markets can be annoying, but they can also open the door to buying opportunities. That’s why now is a great time to make a list of the stocks you want to own and start setting aside money to buy them while they’re discounted.
Of course, you don’t have to stick to individual stocks if you’re more comfortable investing in index funds for the long term. But if you tend to buy stocks of individual companies, spend your time and energy researching those companies to see which ones are a good fit.
3. Find out if you need to change any life plans
If you don’t plan on tapping into your portfolio anytime soon, then there’s really no need to panic about the state of the market. But you may need to reassess a bit if you were planning to retire in a couple of years and rely heavily on your stock portfolio to make that possible.
Of course, the current market downturn we are facing could end up being short-lived. But since we can’t predict how long it will last, it’s a good idea to spend some time contemplating your options if big plans need to be adjusted.
Make good use of your time
Checking your portfolio all the time when stocks are down is not a good way to spend your time, and it certainly has the potential to cause your stress levels to skyrocket. Instead of doing that, tackle the moves above so you can do something productive at a time when you feel helpless.
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