Start a plan to pay off debt and invest. 

How to Prepare for a Stock Market Crash

how to prepare stock market crash

Are we due for a stock market crash? How can you prepare for a stock market crash?

Here’s three tips on how to prepare for a stock market crash.

1. Remember Your Time Horizon

Time horizon is the length of time you’ll being investing. A 92-year old janitor, Ronald Read, passed away and donated $6 million of his $8 million fortune to a public library and hospital.  His community had no idea he was a multi-millionaire.  Maybe it was his extremely frugality; he used safety pins to button his warn out jacket.

Although Read had a low income, he had a long time horizon, or period of time to invest. After graduating high school, he served in the military, then worked at a gas station until 1979, and then part-time as a janitor.  That is over 55 years of working, saving, and investing. 

CNBC reported that Read, “had the control to hold onto stocks for the long haul.” This is known as the buy and hold strategy that Warren Buffett recommends too.

Amen to that.

Related Posts:

2. Expect Down Times

The stock market is a lot like life. When times are good, they are really good, and when times are bad, they get really bad.  Historically the stock market rises and falls in value also. Economic downturns are inevitable. Just like with illness, job loss, or accidents.

Things happen. That’s life and that’s investing.

When (not if) a downturn comes and your portfolio declines, emotions naturally kick in. Often people completely forget their long-term investing plan and take a loss by selling their stocks.  In 08’ the S&P 500 fell 37%, the investors that panicked and cashed-out took the loss. The investors that have a Buffett, buy and hold strategy, ended up winning when the next year the S&P 500 rose 27% and continued to rise for years to follow.

3. Have an Emergency Fund

Lastly prepare for a downturn or economic hardship by having an emergency fund of 3-12 months of expenses saved for a rainy day. When your retirement account declines (whether it’s this year or fifteen years from now) those funds are not funds you will be living off anyways until you are 100% retired. Any uncertainty you have about the economy is then a good reason to get serious about having an emergency fund that is liquid (cash or money market) savings account that is there for a rainy day.

Grab your free guide on investing, debt, saving for emergencies, and buying a home here.

Need a little more motivation? Watch this video about the multi-millionaire janitor.  That will pump you up and prove that anything is possible.

Use those three tips on how to prepare for a stock market crash.

BMCE Financial Education
Carly DeFelice

Hey! I'm Carly

You don’t need to figure this money stuff out on your own. I paid off $35,000 of debt and saved $100,000 by age 26 (earning only average pay). If I can turn things around, you can too!  

Start a plan to pay off debt and invest.

Start a plan to pay off debt and invest

I’ll teach you a simple step-by-step plan to get out of debt and invest.

Real People. Real Results.

kim best money class ever

Kim paid off $45k in 28 months

Jessica and Matthias best money class ever

Jessica and Matthias paid off $61k in 20 months

Loren and Bryce best money class ever

Loren and Bryce tripled their net worth in two years.

“I really enjoyed the enthusiasm and the way Best Money Class Ever helped me acquire a mindset to focus on money. Having a mentor and a process around something as important as money is really critical. Thank you for the guidance. I like the format and the presentations are very helpful.” Alex

“I enrolled to gain confidence and remove anxiety around money” Charlotte

You can pay off debt and build savings too! All you need is an education and a solid plan.

Next class starts April 24th

Let’s Get social!

@bestmoneyclassever

The Ultimate Guide to Managing Money

Why didn’t they teach this money stuff in school?!

Join me in this live free class to get the financial education you need! 

  • Tuesday, June 13th
  • 6:30-8:00 PM Central

Learn a step-by-step plan to pay off debt, invest, and make yourself recession-proof.