[USER]

What are people’s strategies for getting through market corrections. To paint the picture, you save for years to tuck money into the S&P.

You obviously work really hard for this money and then a correction happens like it did in 2007/2008 and you are down 50%.

Thoughts enter your mind about wishing you had left it in cash, although the loss is only on paper at this stage, you feel deflated and your wealth factor is now low.

Your 10 year retirement is now looking like 20 years with your new asset wealth.

What do people do to get through these types of events and seeing red across your portfolio for months on end.

[Shannon]

The market being “down” is a huge sale! Buy more stocks, bonds or ETFs because the market will go back up eventually and you will be laughing.

[Max]

diversification is the key, all of your retirement should not be in the S&P500.

In retirement, I will probably have a two yr expenses emergency fund in a HYSA to help me sleep better at night while the market recovers.

[Bradley]

Buy. Do not panic. The dumbest thing you can do is panic sell.

[Jimmy]

You have to go in with mindset knowing that recessions are part of the business cycle and be okay seeing your portfolio decrease in value by 50%.

You have to understand it’s a marathon not a sprint and see those recessions as buying opportunities

[Stephanie]

If you aren’t close to retirement (5 years or less), the best way to view corrections Is an opportunity! You are now buying everything at a discount and when the market takes off again you’ll be that much farther ahead.

It’s all mindset.

I try to put even more into the market on downtrend because I know it will pay off later (buy low. Sell high).

[Maquissia]

Don’t sell, I did in 08 and regret it everyday. Just hang in there and buy the dip and keep buying.

You will recover faster than you thought was possible.

[Lindsay]

Keep your head down (stop looking at account balances). Keep saving and investing.

Best thing I did in 2022 was not look at my 401k.

[David]

Months? It was years. I kept saving. I was 30 when the Financial Crisis kicked-off. I was technically “Coast FIRE” before that. But I kept saving and stopped looking at the balances dropping.

Should-a-could-a-would thinking will tear you up.

Unless you are retiring in the next 5 to 8 years, my uninformed opinion says stay in the market – diversify, but stay in the market.

I thought I was smarter than the market staying in safe havens waiting for a correction while the S&P and NASDAQ grew and grew.

Corrections happen, but no one knows when they will. When they do, just keep buying.

[John]

You’re playing a long game ….. don’t lose sight of the end goal. Keep some dry powder so that you can buy when everything goes on sale!.

[Dara]

It’s basically Bogo or buy one get one half off. Buy as much as you can. Money is made when you buy not when you sell.

Keep some savings around for the big corrections (20-50% drop) every ten to twenty years.

[Drew]

I take downturns as buying opportunities. When I’m 5 years from retirement I’ll start pushing more money into my HYSA until I have 1-2 years of expenses so if the market turns down I can wait at least two years to let it settle.

Right now I keep 6 months of expenses in my savings account in case of emergency.

When I fully retire I’ll probably try to maintain two years.

That’ll give me ample time to adjust spending, adjust earning or for the market to come back up.

[Jeremy]

I have 20% in physical real estate and am prepared to “buy the crash”. While REITs still have correlation to the stock market, physical real estate does not.

[Aaron]

The us stock market was down 50% at its peak. Your portfolio would only be down 50% if it was 100% us stocks which is very volatile.

Add more asset classes into bonds if you’re worried about not being able to handle the emotional side of a bear market.

You could add in bonds, real estate, foreign stocks, gold, bitcoin to name some others.

[Jakub]

You hold 3 years worth of expenses in short-term T-bills. When a recession hits, you’ll sell those to avoid selling your stocks at a low price.

[Keith]

Very difficult when I started pulling out money from my jids 529 during that time but it was small increments and now things have reaccumulated.

I guess just remember you are buying low during those times and you need some steady stream of income/cash/pension to weather the storms.

[Giampiero]

the best way to get through market corrections is to “stay” in the market, i.e. “Time in the market beats timing the market.”

[Charles]

I will ask the question, “Why am asking such question?”
If I believe S&P is the one to go for long term investment strategy and my retirement was 10 years away before the market correction then I should not change the course.

Instead, I would increase my earning potential as my retirement is now 20 years away instead of 10 years away.

Always try to increase your earning potential as the best approach to counter any market correction.

[Bassel]

Don’t keep invested money you need in the next 5 years. The Dow low in the 2008 cycle came down below 7000, so up 5X since then.

Have to be ready for the long game.

[Amy]

Don’t sell! Don’t get scared. Believe in the stocks that you bought. Or don’t buy them in the first place. I too lost almost 50%, but in the 2000 Teck Wreck.

That was 50% on paper though.

For sure I did have to give up on a few of those stocks eventually but after 3 years or so most were back up to where they had been. Or close lol.

A big negative market event like the ones we are talking about happen about once a decade and you just have to be aware and have companies that you have faith in long term.

Dividend stocks can help because you are getting paid the dividend while you wait for the share price to recover.

Lots of retiree base there whole portfolio on good quality dividend payers so they take that income from the dividend and don’t even worry about what the share price is doing.

If you are young you are gonna wanna have some good growth companies in there too though.

[Micah]

I plan to keep 2 years of living expenses in cash when I arrive at retirement age.. that will give me a lot of flexibility to ride out market downturns.

[Rawee]

Think of it as a stress-test for your portfolio and total net worth, like the end of 2022. My biggest exposure would be: too much tech exposure, too much exposure to the US economy, too much exposure to equities market overall.

From there, you should be alleviating your concerns with diversification, like real-estate or owning a business (not necessarily working, just owning).

Otherwise, a 3 month correction (or worse) its always a buying opportunity to dollar-cost average…

The FIRE elephant in the room is all the people expecting the stock market to only going in one direction.

(The FIRE real-estate people have covered but have more leverage exposure, a la 2008, then I prefer).

Diversification of stocks and real-estate is the answer + owning a local business (I know, work again!) … That is LITERALLY the one thing Boomers will sell over their real-estate portfolio: their small businesses.

[Author]

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