![]() And to be clear, the stock market has managed to recover from every downturn it's experienced. ![]() The reason? Even though stock market crashes can cause portfolio values to sink, if you're fairly young, you have plenty of time to sit back and wait for the market to recover. In that situation, you're better off trading in some of your stocks for bonds, since their value is less likely to fluctuate for the worse, even during periods of turbulence.īut if you're in your 20s or 30s, there's no need to dump any of your stocks or swap them for bonds, even though they've historically been less volatile. For this reason, it's important to not invest too heavily in stocks if retirement is right around the corner. Many people invest money during their working years so they can use their portfolios as an income source during retirement. Make sure your investments are appropriate for your age ![]() Many brokerage accounts let you buy ETFs and won't charge commissions to add them to your portfolio. If you own 12 different stocks, but seven of them are tech stocks and four are energy stocks, you may want to swap a few of those for companies in other industries.Īnother option is to buy exchange-traded funds (ETFs), which allow you to own a bucket of stocks with a single investment and are a great diversification tool. Take a look at the stocks you have in your brokerage account. Whether you're looking for a special sign-up offer, outstanding customer support, $0 commissions, intuitive mobile apps, or more, you'll find a stock broker to fit your trading needs. So if you own too many similar stocks, your portfolio value could really take a serious beating.įind the best stock broker for you among these top picks. Sometimes, stock market crashes can hit one segment of the market harder than others. But you should also aim for a diverse collection of stocks. Your goal in buying stocks is to assemble a healthy mix that's likely to gain value over time. But if history tells us anything, it's that stocks will crash eventually. We may not even experience one next year. Of course, we may not see a full-fledged stock market crash this year. And when you have a situation where many stocks are trading for more money than they're actually worth, it sets the stage for everything to come crashing down. Right now, stocks are inflated across the board, and many stock prices don't reflect the actual value of the companies behind them. It's impossible to predict when the stock market will take a turn for the worse. And that's why it's important to gear up for a stock market crash. Sure, there were some rocky weeks, but all told, 2021 has been a strong year for stocks.īut when it comes to investing, good things tend to come to an end, at least for a period of time. The stock market has been on a pretty good streak this year. Every investor needs to be ready for the next downturn. ![]()
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