5 Key Tips to Survive a Market Crash | Personal Finance

You run the risk of going crazy if you check your stock portfolio every day (sometimes every hour), wondering if you should buy or sell based on what you hope the stock market might do next. The more you let this stress in, the more likely you are to try to trade around market activity.

A study showed that around 80% of mutual fund managers underperform S&P500 over five years. Why? This could be because fund managers are responsible to customers and their expectations and seek short-term returns to attract new investors. Do not do that. Instead, think of every stock you own as a partnership with that company. Examine the company’s performance, management and long-term goals. Don’t let the stock price tell you what you think.

It is common for stocks at all levels to trade lower during a stock market crash – the baby is thrown out with the bathwater, as they say. So use a crash as an opportunity to focus on unfairly sold gems.

2. Use the cost average

Once you’ve identified a company you want to partner with (invest in their stock), please don’t pay them a giant lump sum. It’s just another way of trying to “time the bottom” during a crash. You might look at this stock that’s down 50% from its highs and think, “It can’t go much lower.

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