Briefly –
- The extended stock price slump has most investors worried about their money.
- Though selling can be tempting, that remains a risky approach.
- Meanwhile, you only need a little effort to protect your savings.
It’s indeed scary to invest amidst crashing stock markets. Moreover, your investment portfolio might have declined, and you might plan to withdraw your money from the marketplace to avoid further losses.
Are you scared about losing your cash amid the ongoing market wreck? You aren’t alone. Nevertheless, you can apply a simple but effective approach to safeguard your portfolio even if the current crash worsens. Leave your savings in the marketplace.
Why Selling Could Be Risky
Stock prices remain lower during downturns in the marketplace. Some scenarios can see stocks losing up to 40% of value. Pulling your investments out of the market amid current situations translates to selling at massive discounts. That would mean losses and the potential of losing enormous dollars, depending on the acquisition price.
Moreover, anyone selling now will likely want to reinvest down the line. However, the stock market remains unpredictable as far as the near term is concerned. That means challenges in knowing when to repurchase.
You might recall the COVID-driven market crash of March 2020. Most investors perceived the stock market tumble as a prolonged bear dominance. Surprisingly, the market bounced back within no time to set new records within the following two years. Anyone who withdrew his investment would have incurred losses and reinvested at much higher prices.
An Effective and Safer Option
Though it could appear counterintuitive, the safest way to survive volatile markets is to do nil. Do not sell and never worry about timing the market. Ride through the storm while holding onto your investments.
This strategy remains viable since you will not lose cash unless you resort to selling. Though it’s painful to watch your portfolio deteriorating, losing value differs from losing money. Moreover, the market always rebounds after turmoil, and your investment will inevitably regain the lost money.
Feel free to share this article with fellow stock market enthusiasts.
