Can Americans Survive a Stock Market Crash?

Whether you're in the upper 1% or the bottom half, it's likely everyone has investment portfolios of some sort.

That might mean your retirement plans (401(k) or individual IRAs). Or it could be something much more significant than that. The size of your portfolio doesn't matter for this discussion.

So, how do we protect our investment portfolio in light of the recent market downturns? What, if any, steps can we take to cushion the blows without sacrificing returns?

Have a Plan

Here is the main point of having a plan. It provides a roadmap. It has a target date (or time) when you want to use the money. That time will guide how you invest. It will keep you focused on the goal and not what's going in in the short term.

If you manage your investments, one or more of your mutual fund companies likely have portfolio analysis tools you can use. No one likes volatility when investing. Therefore, if the dislike turns into fear, it's time to make changes.

Check Your Risk Level

Make Sure Your Investments Are Diversified

Investment diversification means you don't want to have all your investment eggs in one basket. Having your investments spread across various asset classes (stocks, bonds, cash, real estate, etc.) helps manage risk.

At its most basic, asset allocation means how much money you have in stocks, bonds, and cash. Stocks and bonds describe broad asset classes.

Asset Allocation

Control What You Can Control

Steps one through three are all things we can control. Spend time working on those things. What we can't control is what the market does, especially in the short term.

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