5 Tips: How the YOUNG Survive a Stock Market BEAR Attack!

It happened!

Not how or why anyone could have predicted, but the most unprecedented bull market in history has hit a wall, and then a cliff.

No one needs explanation on what is going on, but felt it was time to provide some guidance on what to do from here with your money.

Here are 5 tips to help you survive this Bear Attack:

1. Check Your Emotions

What is the main reason that individual investors lose money verse institutional investors?

Their emotions!! 

Stop looking at what you don’t control (the market) and focus on what you control 

Something we have all heard many times and is being proven, yet again! 

People who were so proud of their portfolio for being up 20-30% in recent years, run for the hills at this first major dip. Why no one questions the rise, yet everyone questions the fall will never fully be understood, but the impact on your portfolio is major. 

If you don’t read any further take this ONE piece of ADVICE - DON'T LOOK!!!

Stop checking the day to day or hourly updates. The market is going to correct from a decade of boom with a horrible and global bust. 

But you can not let the waves dictate where you go. For that, we go to tip #2. 

2. Remember Your Goals

When you began investing you had goals, right?

If not this can be a very crazy time for you and I suggest you re-evaluate what your plan is built on.

If you did then ask yourself - Did those goals change? 

I have received quite a few messages regarding people's 401(k) accounts being hit. (mainly from people under 40!)

No matter what journey you are on, if your goals don’t change then ask yourself why would your plan?

My question to them is: “were you planning on walking away in the next 5 years?” 

• 'No'

Ok then this vehicle that is intended for your retirement is every bit still on pace as it was up 20% last year. You only gain or lose money when you sell and you aren't expecting to do that for 20 more years.

No matter what journey you are on, if your goals don’t change then ask yourself why would your plan?

3. Think BIG picture

Who was in uproar last year when the market soared? 

Who understands the market is volatile and there have been events like this in the past?

When you look at money, you base your comfort-ability with how long you see money. 

Do you see it in a day to day; year to year; or decade to decade perspective? 

This will allow you to see events like this past week through a different lens, a big picture time lens. 

When we look through the lens of a 50 year time period this downturn appears but not as drastic as a 6 month lens. 

Have you looked at this event and your money through a 50 year lens?

Do you see it in a day to day; year to year; or decade to decade perspective? 

4. Use a Dollar Cost Averaging Strategy

Dollar cost averaging is a way to remove your emotions and maintain a strategy. 

It merely says you will continue to invest in a systematic basis:

• - every Friday
• - first of the month
• - beginning of quarter

Whichever makes you most comfortable. 

What the strategy aims to do is reduce the volatility of large purchases or market swings. “Dripping” into the market little by little will essentially put your share prices at different levels, averaging out to a price you are comfortable with. 

Implementing this DCA method today means you are ok with the market dropping again because it will lower your average purchase price. 

Tolerance is what you can stomach; Capacity is what you can withstand

5. Measure Tolerance AND Capacity

You should never invest money you don’t have or money that will ruin your world. 

What seems so obvious is actually very difficult to measure and even more difficult to follow. 

Your risk capacity is how much you are able to withstand a market downturn. This is why your journey begins with getting out of debt and an emergency fund, for THIS TIME exactly. 

Are you scrambling to find cash amongst the losses to survive the year or worse the month? 

This time is also a check of tolerance, the amount of volatility you can stomach. Some people see the red, see the chart drop, see the percentages and get absolutely sick to their stomach. 

That is a sign you took on too much risk. 

This lesson both on the capacity and tolerance front is not one you can change today, but is one you can better understand for the next time, because once this one corrects there will be a next. 

In the end we all know what is happening in the market, we feel the panic and that is what the market is based on - emotional predictions and reactions. 

There will be some, mostly institutional investors, who will try and time this, try and profit off of the chaos and be assured some will. 

But the best thing for you to do is stop looking at what you don’t control (the market) and focus on what you control: 

1. Your spend
2. Your mindset
3. Your family