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Could Your Savings Handle A Cruel Market Twist?

Thursday, November 21, 2013 - 8:16 AM
The stock market is on its way to a great year in 2013. That makes this a bad time to get complacent about retirement planning. Financial markets have a way of delivering severe twists when people least expect it. Can your savings handle an unpleasant surprise?

Handling Sudden Market Downturns
ShorebreakShorebreak2,695 posts since
Apr 6, 2010
Rep Points: 14,614
1. Thursday, November 21, 2013 - 8:26 AM
In a real Bear Market, diversification is not going to help you (it is a broad decline).

5. Have a strategy that is robust during good as well as worst situations.

6. Stay the course without fear/greed (a cool mind and steadfast determination).

7. No herd mentality.

8. Be modest in the expected gain.

9. Be very conservative on the equity coverage; e.g., if you think you can handle 50% in equity, do 30% instead.

10. Test your strategy with the sleep-well metric; adjust as necessary. 
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
2. Thursday, November 21, 2013 - 8:40 AM
51:      Darn it!  You got me on the "cool mine" part.  I sure have had "steadfast determination" but not for the stock market.    Your advice is really on the mark for anyone seriously thinking about sticking a "toe" into the stock market.    The "sleep-well metric" to me is a necessity even if you are in CDs.  With these low interest rates, many people may not be sleeping well over rates they take.  Once I decide to accept a low rate, I can be at peace because I know why I did it and I don't stew over it.   Good points for any and all savings or investments, imo. 
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,151