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.
If the Surf is Up, You Should Ride It
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.
As an example, if one puts down $500 into a stock fund for one's 401(k) every month and the market is dipped on one's payday, this would be good as one receives more shares for their money than if the markets were up. One could view such market conditions as everything really being on sale.
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.
Arguably, the real estate market is not going to see the big stretches of growth that it has in the past. Ultimately, real estate is going to level off. Stocks will therefore become the vehicle for the long term investor.
Don't Run For Cover
When one is faced with the financial tornado or hurricane of a volatile market it is time, as a long term investor, to bunker down. If one were to sell during these down times one is going to miss out on the eventual lift. One has to remember that stocks often turn around very swiftly during market recoveries.
Generally it's going to be much more important to be in the bull market from the very beginning than it would be to avoid the bear markets. Back in the 92-01 the S&P 500 had a 175% return. If you were someone that was on the sidelines during this time then you missed out so much and lost so much "free" money. Don't ever duck and run for cover, this isn't for investments.
Stash Your Cash
You don't want to be cash poor and having to sell off your assets to fund your basic needs. Bear markets generally are good for 3 years so you will have to have some liquidity available through CDs so that you can take on renovating your house, traveling or educating your children.
Stop, Look, Listen
You really need to try to stop worrying. Look at the position that you're at now and then listen to the advice of a trusted financial adviser. Creating a strong financial plan is just what the doctor ordered and the promise to get yourself back on track and begin moving toward your future when you come to the times that you feel you've lost your way.
