3 Things I'm Not Doing During the COVID-19 Stock Market Downturn – The Motley Fool

This post was originally published on this site

The COVID-19 health crisis has sent the stock market plummeting in recent weeks, so much so that we’ve officially entered bear market territory. And with each day bringing more and more bad news about confirmed cases and widespread job loss, it’s hard to see the light at the end of the tunnel.

In fact, it’s natural to get discouraged at a time like this, both as a person and as an investor. But the moves you make — or don’t make — in the coming weeks could really have an impact on your long-term financial health, so with that in mind, here are three things I’m specifically not doing during the current downturn.

IMAGE SOURCE: GETTY IMAGES.

1. Panic selling

It’s easy to take a look at your portfolio, gasp, and start selling off investments left and right in an effort to stop the bleeding. But one thing you need to remember about any stock market crash is that you only lose money if you actually your liquidate investments when they’re down. If you stay calm and leave your portfolio untouched, you won’t guarantee those losses.

Remember, the stock market has a strong history of recovering from downturns — even major ones. So unless you need to sell investments to cover essential near-term expenses, leave yours alone.

2. Checking my portfolio balance every day

Having online access to brokerage accounts can be both a blessing and a curse. On one hand, it makes it easy to make trades or see how your portfolio is doing. On the flip side, though, it makes obsessing over losses easy as well. That’s why I’ve pledged not to check my portfolio every day during this downturn.

What I did do last week was see how much cash I had available in my brokerage account and review my stocks to ensure they were fairly well-diversified. But I haven’t checked my balance since, which is better for my mental health.

3. Avoiding new stocks

When the stock market is down, it’s easy to assume that sitting back and staying away is a smart move. But if you have money on hand to invest, now is actually a great time to buy quality stocks while they’re less expensive. Another option? If you don’t want to research individual stocks (say, if you find the process too daunting), load up on S&P 500 index funds. These funds follow the broader market and aim to match its performance, and they take a lot of the legwork out of investing.

To be clear, I won’t be raiding my emergency fund to pad my stock portfolio. Rather, I’ll be using any extra money I earn, as well as the money I already have sitting in cash in my brokerage account. While now is a good time to invest, don’t do so with the money you may end up needing for shorter-term expenses, especially since a full-blown recession could be right around the corner.

Stock market downturns are by no means easy to deal with, so really, the best thing you can do in the coming weeks is keep calm, breathe deeply, and avoid rash decisions. We don’t know how long the current crisis will play out, but it helps to have faith in the stock market’s ability to rebound, as it’s done so many times before.

This post was originally published on *this site*