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What To Do When The Market Tanks

If you're already invested

Do nothing. It's hard to watch your account go down. Seeing all the red on your statement makes most people abandon a sound investment strategy. We all know if we take a step back and think rationally, markets do go down from time to time. Historically though, they always continue to move higher. The worst thing you could do is to sell at the bottom out of fear. When the market eventually stabilizes and begins to rebound, you'll be left trying to chase it on the way up, only to buy back in at prices that are higher and higher. As we (and Warren Bufffet...ahem) say, "Buy right and sit tight". If you invested correctly and have a diversified portfolio it's meant to ride out these difficult times. The best thing you could do is add money to the strategy with any cash you may have sitting on the sidelines. Tax refunds are great for this too!

If you're not invested

Start Buying! The world is on sale... Use this as a chance to begin averaging-in to the market (buying in to the market in 2-3 batches instead of all on one day). In the end you'll likely end up with a lower cost per share by not buying everything at one price. Think of this sell-off as a buying opportunity. We all love going to the store and getting 20%, 30% off. Well when it comes to investing if you can get in 20% or 30% cheaper it can only help you make more money in the end. When you hear how much the market is down, think SALE SALE SALE! Happy Investing!