This is such an easy one: NO, you should not be scared about the stock markets.
Whether or not you invest in stocks, bonds, or funds, just think of the market numbers like you would a thermostat. Maybe it’s like a thermostat in Kelvin, which is puzzling to you, but it’s still showing you information.
It’s totally up to you what you do with the information, so why would you choose to freak out?
Plunging market numbers tell you when people with money in those markets are nervous, although they never tell you exactly why they are nervous. The nervousness can be amplified by nervous robots, and that’s just one of those 21st century ailments that make impatient people build better robots.
Nervous folk have always rushed to put cash under the mattress when they get worried, and we have no reason to expect that reflex will ever go away.
When a panic really gets rolling it’s much like a game of musical chairs and nobody wants to get caught without a chair when the music stops. Savvy investors know that it doesn’t matter, because in reality, the only people who will be left without chairs are the ones who didn’t have money to play with in the first place.
Markets collapse. You may not really remember it, but there was a global collapse twelve years ago. It definitely wrecked lots of plans and shoved a lot of people into tight corners, but whatever panic they may or may not have felt only created more harm.
When you are caught in a financial tsunami, it’s just like a real tsunami without the water. Keep calm, form a strategy and hope for the best. Everyone around you is in the same predicament, and some of them have boats.
Try to remember that it really doesn’t matter if you can still afford to have fifty dollars worth of mashed potatoes delivered to your home. What matters is that you take the time to use good judgment, and don’t waste fifty dollars on five cents worth of food, markets or no markets.
The rules for a financial crisis are the same as regular rules: don’t be a jerk, save some of your money all the time, and don’t put mashed potatoes under your mattress.
p.s. When the prices are scraping the bottom of the chart, it’s a great time to invest. Pick something you have a high comfort level with and don’t invest money you’ll need for the next ten years. If you fly a lot and you love Southwest Airlines, why not buy some LUV? [If their ad appears below I had nothing to do with it!]
Feel free to add a question below in the comments!!