Financial Fixes, Five for Tough Times

This article provide five points of focus for one when faced with unpredictable financial markets. When faced with market volatility it can be stressful to keep one’s financial plans on track and these five points will come in handy help focus one’s efforts.

You Should Ride the Waves, When the Surf Is Up

When the market takes a down turn one can turn such into an opportunity. During these low market conditions many stocks of very solid companies are dipped. One can therefore make a move into the market and grab these stocks. Essentially, one is getting more stock for less money.

For example if you say put $500 into a stock fund for your 401(k) every month and the market is down on your payday then you’ll be so happy as you’re going to get more shares for your money than if the market were say up in the clouds. It’s pretty much like you go shopping and find out that everything that you want is on sale. This is a long term investment so don’t worry about when the market is low and you’re investing, ride the waves.

Buy Low, Sell High

Inherent in our natural psychological nature is the want to invest in the winners. Nobody wants a loser. In the reality the economic cycles will usually show you the opposite track. If real estate and bonds have gone up then the stocks are likely to have gone down and it’s really time to buck that trend.

Is real estate going to continue to increase in value? There is a possibility but its highly unlikely that we are going to see strong surges that resembles those of the pass. Most likely real estate is going to level off and stocks will be the long term investors best area to be focusing on.

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

Ultimately, you need to stop worrying. You need to assess your position and then listen to the advice of a trusted financial adviser who will help you create a strong financial plan. Following this plan will get you back on track and moving towards the future you are envisioning.

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