How to Prepare for a Stock Market Crash

There’s been a lot of recent buzz surrounding predictions of an impending stock market crash. Spring, TX financial advisor Arkhat Zhumadilov agrees with the prognostications. Inflation, supply shortages, the war in Ukraine, the unrest here in America… all of these things can lead to a crash.

The stock market runs in cycles and crashes will always be a part of the cycle. It’s not a matter of if the market will crash again, but when. It sounds scary, but Zhumadilov shared tips on how investors can prepare.

Save Your Money Now

This will always be good advice concerning any financial matter, but a crash can lead to layoffs, and it’s a good idea to have emergency savings that are separate from your retirement fund. 

If you don’t already have it, Arkhat Zhumadilov advises residents of Montgomery County, TX to set a goal of saving enough to cover a 6-month bout of unemployment. 

Reassess Your Investments

“In the face of a stock market crash, most people’s first thought is to sell immediately,” says Arkhat Zhumadilov, “but don’t let fear make financial decisions for you! Take the time to reassess your investments thoughtfully.” 

Think about the reasons you chose an investment and the reasons for the current state of the economy. If you have stock in a company you didn’t research well back when you first invested, then that may be a good option to reconsider. But if you believe in a company’s future, stick to your plan. If it ain’t broke, don’t fix it.

Diversify Wisely

The more variety you have in your stock portfolio, the less any individual investment can drag it down. But that doesn’t only mean a lot of different stocks. One thing most portfolios are short on is bonds. Aim for a ratio of about 60% stocks, and 40% bonds.

“Keep in mind that diversity doesn’t only mean different companies,” added Zhumadilov. “But companies that you’ve chosen based on a variety of market trends.” A bunch of different tech startups is not truly shoring up your portfolio with diversity.

Work with a Trusted Financial Advisor

There just are not enough hours in the day for every person to become a finance wiz. Much like we have doctors to advise us on maintaining our health, an expert financial advisor can guide you through making important decisions with your money. 

Arkhat Zhumadilov’s office in The Woodlands, TX coaches hundreds of clients each week on how to prepare for and survive market crashes. He shared some final advice for when the next crash inevitably comes:

“Make note of how you stuck to or strayed from your game plan during the crash. Every crash may be different, but you can learn from what you did well, and what you can do as a savvy investor to better meet a crash when the next one comes around.”