Surviving a Stock Market Crash - 5 Tips to Show You How

It is scary when the money you were counting on for retirement, education, or your home is rapidly declining in value. Don't panic though. Here are some 5 tips to help you survive:

1. People are living longer:

Males that reach the age of 65 nowadays will have a 49% chance of living to 86. Women will have a 49% chance of living to age 89. With that in mind, it's obvious that you will still need the help of equities (stocks and stock mutual funds) to help you grow your portfolio and keep ahead of taxes and inflation.
Don't abandon these investments.

2. Rebalance where necessary.

Take a look at your portfolio winners. If you had targeted say 20% in international and it is now 30% of your portfolio. Sell enough to bring it back down to 20% and use that cash to invest in another sector that you don't own. Remember that you don't have a realized loss until you sell. Take just enough of a loss to offset the gain that you took above, and then you will pay no tax on the transaction.

3. Diversify.

Don't have any winners? Then you weren't diversified enough to begin with. You should have had enough in each asset class (large-cap, mid-cap, small-cap, international, etc.) and each style (growth, value, blend, balanced, etc.) to create an investment plan to reach the return you need with the risk you are comfortable with, and in the time period that you targeted. Believe it or not, there are some mutual funds that have managed to keep their returns higher than the more than 23% loss of the S&P500 Index this year. There are a lot of free resources such as morningstar.com that will give you the data you need to diversify and feel better about your holdings.

4. Make decisions now.

Act now. Don't look for bottoms. You don't ever know where the bottom is but you do know that stocks are steadily getting cheaper and there are some fantastic buys out there. You may not have control over the market but you do have control over what you buy and what you sell. Don't wait.

5. Get a guaranteed income for life.

Along with positions of cash, bonds, and equities, a fixed annuity should play a part in a portfolio of someone close to working part-time or retiring altogether. An annuity is an insurance contract that in return for a lump sum of money gives you a steady fixed stream of income that is guaranteed for your life or the life of you and your spouse. For people who want to spread out their risk, this is an excellent addition to a portfolio. The downside is that you don't get any inflation protection since the payments remain the same. The upside is that you get an income stream guaranteed by the insurer so you don't have to worry about managing the money. Of course, you need to make sure the insurer is financially strong enough to be able to pay you throughout the term of the contract.

People like Floyd Odlum made millions during the Great Depression, not by fleeing into cash and bonds but by buying into stocks as the market dropped. His motto during the crash was: "There's a better chance to make money now than ever before."

Don't lose this opportunity to arrange your portfolio to meet your future needs. Follow the five steps above, and you won't have to worry about what the stock market is doing ever again.

Published At: Isnare.com Free Articles Directory - http://www.isnare.com/

Surviving a Stock Market Crash - 5 Tips to Show You How

It is scary when the money you were counting on for retirement, education, or your home is rapidly declining in value. Don't panic though. Here are some 5 tips to help you survive:

1. People are living longer:

Males that reach the age of 65 nowadays will have a 49% chance of living to 86. Women will have a 49% chance of living to age 89. With that in mind, it's obvious that you will still need the help of equities (stocks and stock mutual funds) to help you grow your portfolio and keep ahead of taxes and inflation.
Don't abandon these investments.

2. Rebalance where necessary.

Take a look at your portfolio winners. If you had targeted say 20% in international and it is now 30% of your portfolio. Sell enough to bring it back down to 20% and use that cash to invest in another sector that you don't own. Remember that you don't have a realized loss until you sell. Take just enough of a loss to offset the gain that you took above, and then you will pay no tax on the transaction.

3. Diversify.

Don't have any winners? Then you weren't diversified enough to begin with. You should have had enough in each asset class (large-cap, mid-cap, small-cap, international, etc.) and each style (growth, value, blend, balanced, etc.) to create an investment plan to reach the return you need with the risk you are comfortable with, and in the time period that you targeted. Believe it or not, there are some mutual funds that have managed to keep their returns higher than the more than 23% loss of the S&P500 Index this year. There are a lot of free resources such as morningstar.com that will give you the data you need to diversify and feel better about your holdings.

4. Make decisions now.

Act now. Don't look for bottoms. You don't ever know where the bottom is but you do know that stocks are steadily getting cheaper and there are some fantastic buys out there. You may not have control over the market but you do have control over what you buy and what you sell. Don't wait.

5. Get a guaranteed income for life.

Along with positions of cash, bonds, and equities, a fixed annuity should play a part in a portfolio of someone close to working part-time or retiring altogether. An annuity is an insurance contract that in return for a lump sum of money gives you a steady fixed stream of income that is guaranteed for your life or the life of you and your spouse. For people who want to spread out their risk, this is an excellent addition to a portfolio. The downside is that you don't get any inflation protection since the payments remain the same. The upside is that you get an income stream guaranteed by the insurer so you don't have to worry about managing the money. Of course, you need to make sure the insurer is financially strong enough to be able to pay you throughout the term of the contract.

People like Floyd Odlum made millions during the Great Depression, not by fleeing into cash and bonds but by buying into stocks as the market dropped. His motto during the crash was: "There's a better chance to make money now than ever before."

Don't lose this opportunity to arrange your portfolio to meet your future needs. Follow the five steps above, and you won't have to worry about what the stock market is doing ever again.

Published At: Isnare.com Free Articles Directory - http://www.isnare.com/

Surviving a Stock Market Crash - 5 Tips to Show You How

It is scary when the money you were counting on for retirement, education, or your home is rapidly declining in value. Don't panic though. Here are some 5 tips to help you survive:

1. People are living longer:

Males that reach the age of 65 nowadays will have a 49% chance of living to 86. Women will have a 49% chance of living to age 89. With that in mind, it's obvious that you will still need the help of equities (stocks and stock mutual funds) to help you grow your portfolio and keep ahead of taxes and inflation.
Don't abandon these investments.

2. Rebalance where necessary.

Take a look at your portfolio winners. If you had targeted say 20% in international and it is now 30% of your portfolio. Sell enough to bring it back down to 20% and use that cash to invest in another sector that you don't own. Remember that you don't have a realized loss until you sell. Take just enough of a loss to offset the gain that you took above, and then you will pay no tax on the transaction.

3. Diversify.

Don't have any winners? Then you weren't diversified enough to begin with. You should have had enough in each asset class (large-cap, mid-cap, small-cap, international, etc.) and each style (growth, value, blend, balanced, etc.) to create an investment plan to reach the return you need with the risk you are comfortable with, and in the time period that you targeted. Believe it or not, there are some mutual funds that have managed to keep their returns higher than the more than 23% loss of the S&P500 Index this year. There are a lot of free resources such as morningstar.com that will give you the data you need to diversify and feel better about your holdings.

4. Make decisions now.

Act now. Don't look for bottoms. You don't ever know where the bottom is but you do know that stocks are steadily getting cheaper and there are some fantastic buys out there. You may not have control over the market but you do have control over what you buy and what you sell. Don't wait.

5. Get a guaranteed income for life.

Along with positions of cash, bonds, and equities, a fixed annuity should play a part in a portfolio of someone close to working part-time or retiring altogether. An annuity is an insurance contract that in return for a lump sum of money gives you a steady fixed stream of income that is guaranteed for your life or the life of you and your spouse. For people who want to spread out their risk, this is an excellent addition to a portfolio. The downside is that you don't get any inflation protection since the payments remain the same. The upside is that you get an income stream guaranteed by the insurer so you don't have to worry about managing the money. Of course, you need to make sure the insurer is financially strong enough to be able to pay you throughout the term of the contract.

People like Floyd Odlum made millions during the Great Depression, not by fleeing into cash and bonds but by buying into stocks as the market dropped. His motto during the crash was: "There's a better chance to make money now than ever before."

Don't lose this opportunity to arrange your portfolio to meet your future needs. Follow the five steps above, and you won't have to worry about what the stock market is doing ever again.

Published At: Isnare.com Free Articles Directory - http://www.isnare.com/

What Made the Stock Market Crash

Unless you have been living under a rock for the past few years it is pretty obvious that we are in the middle of a financial crisis but does anybody truly know what made the stock market crash? Was it the banks that over extended themselves lending truck loads of money to every man and his dog (in some cases even lending money to the dog itself). The banks didn’t seem to worry about the ability of their customers to repay the mortgages, you simply needed to have a pulse and you could have some money. So was it the banks fault? Yes to a certain extent but surely there were other factors? And what about the non-banks? Their share prices have been slashed as well yet many of them weren’t involved in the subprime crisis at all? So once again I ask what made the stock market crash? To find the answer I would like to have a look at the more basic concept of human emotion and the effects they had on the stock market crash.

If we look back at the stock market history it becomes very clear that the stock market rises slowly and falls quickly. This has pretty much always been the case if you look at the stock market crash of 1929 or the recent bull market that we have experienced. Generally it takes less than a year to wipe off half a dozen years of strong market gains. So why is this the case and more importantly what can we do about it?

Stock markets fall faster than they rise because people react quicker to fear than they do to greed. What? But that doesn’t make sense – surely most people are extremely greedy? While they might be, they are generally more scared of fear than they are concerned with greed. Let me explain.

When the stock market is rising more and more people invest their money into shares. More importantly more and more ‘new investors’ start to put their savings into the stock market. As a bull market develops this happens more and more because there are now more stories around about people making good returns on their shares. It normally takes people quite a while to believe these stories but eventually they start hearing from everywhere how well the stock market is going so they start putting some of their own money in too. Unfortunately by the time lots of these people put their money in the bull market has just about run out of steam. Will you hear about this in the newspapers? No, markets have a funny habit of doing the exact opposite of what most thin they will. So as you can see whilst greed is a strong emotion it normally takes a long time to build up.

On the other hand fear seems to take over extremely quickly. As soon as the market starts to tip over it can move 10-50% in a few weeks or months. Why? Because people are extremely fearful of losing their profits that they have made during the bull markets. More importantly they are fearful of losing the things that they have already bought in their minds with the profits.

So what made the stock market crash? Whilst the banks were the catalyst it was combination of fear and greed that actually caused the market to swing so radically.

Published At: Isnare.com Free Articles Directory - http://www.isnare.com/

Why You Should Buy In A Stock Market Crash

When potential new investors are asked what they fear the most the answer is emphatically the worry of a stock market crash but it is only a worry if you are on the wrong side of the investment. Read on to find out why you should buy in a stock market crash.

Certainly if you are sitting with a nice portfolio and suddenly there is market crash you are going to feel the effects. But it’s a time with much potential which is why you should buy in a stock market crash. What a great time to add to your portfolio and benefit over the long haul. The modern day stock market crashes rebounds much quicker than the crash of 1929 which is another reason why you should buy in a stock market crash.

The crash of 1987 was a result of overvalued stock and a lack of liquidity. The crash of 2000 was the result of overvalued stock and corporate corruption. Many investors made themselves into millionaires during both of these crashes which is why you should buy in a stock market crash.

You might be surprised to find out that a stock market crash actually begins years before the actual crash. Prior to a crash there is a bull market with everything booming but at the end of every bull market is a bear market where things take a turn for the worst. That’s why you should buy in a stock market crash and then hold until it cycle back to a bull market.

Sometimes the market crashes because of a specific political or economic situation but generally a crash is panic generated by investors with no underlying reason. Smart investors get the checkbook out and start spending for you will definitely seek some nice financial rewards. It’s the reason why you should buy in a stock market crash.

During a stock market crash many loose big but there are also many excellent stock buys to be found. It’s a great time to have some extra cash kicking around even if it just a couple of hundred dollars. Now you know why you should buy in a stock market crash – the rest is up to you – just be ready for that next crash because it will come.

Now that you know why you should buy in a stock market crash you just need to wait for the crash.

Copyright © 2007 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.)

Published At: Isnare.com Free Articles Directory - http://www.isnare.com/