One thing I always stress whenever stocks are falling is it’s important to stay calm. When you’re calm, you’re more likely to make rational long-term investment decisions.
But let’s face it, staying calm is not always easy during a stock market crash. When share prices are falling sharply – as they have been over the last month due to the coronavirus – and the balance of your investment portfolio is shrinking at an alarming rate, it can be a very stressful time.
There are a few things you can do to ease the stress, however. Here are three things I do to stay calm when the stock market’s in meltdown.
Look at the opportunity
The first thing I always do is think rationally, and look at the long-term track record of the stock market. I remind myself that investing is a long-term game, and that stocks have crashed many times in the past and always recovered.
I also ‘reframe’ the situation. Instead of focusing on how much money I’ve lost (on paper) as share prices have declined, I look at the lower share prices on offer as a buying opportunity (I believe there are some great buying opportunities now, by the way). This helps me stay calm and stick to my long-term investment strategy.
Limit portfolio monitoring
The next thing I do to stay calm during a stock market crash is limit the number of times a day I check my portfolio. In my experience, checking your portfolio constantly when share prices are falling is just one way to drive yourself crazy. The more you check, the more stressed you tend to become. If you want to reduce your stock market-related stress, monitoring your portfolio less regularly is a good idea.
Step away from it all
Finally, when stocks are crashing, I like to do things that will take my mind off the markets. For example, I’ll turn off my smartphone (receiving constant updates in relation to stock market movements generally doesn’t help to stay calm during a stock market crash) and go for a run. Or, I’ll hit the gym (although this may not be a good idea in the current environment). Taking my mind off the stock market helps me to relax and puts me in a better frame of mind to make rational investment decisions.
Ultimately, the key to surviving a stock market crash is to think long term, and not get too caught up in the chaos of it all. It’s never easy when share prices are falling, however, if you have a long-term view, you should be okay.
If you’re looking for more information on how to manage the current stock market crash (and take advantage of it), you’ll find plenty of excellent information here at The Motley Fool.
The post Stock market crash: how to stay calm when share prices are falling appeared first on The Motley Fool UK.
- How I'm investing in the worst stock market crash since 1987
- How I’d invest £10K in this FTSE 100 stock market crash
- FTSE investors! Why I'd do what Warren Buffett does when markets crash
- Warren Buffett’s advice on how to handle a 50% drop in the markets
- The FTSE 100 has crashed 20%. Here’s how I’d invest £5k today in a Stocks and Shares ISA
- Top shares for 2020
Views expressed in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020