After the Crash – How to Survive a Stock Market Freefall

stock market freefallIn today’s rocky financial market, do you have days when you wonder should I still be investing? Trust me. I do, too.

Most of us have had that passing thought at one time or another and even more so in the last few years since the big stock market crash.

It seems one day the market goes up only to go back down the next day. Even though the market continues to have its ups and downs it is still important to look to the future and while you should possibly make some tweaks in your investment planning, you absolutely should still continue to invest. Here is a lowdown of what you should be doing to protect your financial future.


Keep Funding Your 401(k) And Your Roth IRA

While you may not be seeing huge returns right now, that does not mean you should stop funding your investment accounts. Make sure your funds are allocated in such a way that you feel comfortable and at the very least make sure you are contributing the maximum yearly amount to your Roth IRA and any employee match to your 401(k).

Even if your company pulled the plug on the 401k match, that doesn’t mean you should stop contributing. Remember: if you’re not saving for your own retirement, then NO ONE is.

If you’re a small business owner, now is a better than time than any in opening a business retirement plan. A very inexpensive option is the SEP IRA. The rules of the SEP IRA allow you to invest up to 25% of your income (depending if you’re a LLC or individual) each year. That’s a huge business expense as well as investment in your retirement!



Yes you have heard it before, make sure you diversify your investments. Even young investors probably don’t want to put all of their funds into risky options today, but at the same time you shouldn’t have your entire portfolio in bonds, for example. Carefully consider your age, your financial goals and work to create a portfolio that will make sense for you.

If the stock market isn’t your thing, then consider Peer to Peer Lending. Companies such as Lending Club and Prosper allow you to act as the bank loaning small increments to those in need and collecting on the interest.


Consider A Roth Conversion

If you did not jump on the opportunity in 2010 to convert a traditional account into a Roth IRA you still have time. Prior to 2010 you could not make such a conversion if your AGI was $100,000 or over.

In 2011 just like 2010 your income does not matter and anyone can convert. For many, now is a perfect time to convert as account balances are still down which means you will owe less tax dollars on the conversion.

Applies to old 401k’s, too. You have the ability convert old 401k’s into Roth IRA’s, too. This is only an option if you are no longer with that employer.


Perform A Check Up On Your Retirement Plan

Periodically you should review your retirement plan, after all times and circumstances do change and your plan may need to change as well. Being proactive will help to make you aware of any possible shortcomings, etc.

Planning for retirement is serious business and if you do not plan accordingly you could be scrambling once you do hit retirement age. Take the time now to review where you are and what you need to do here and forward to be financially ready to retire when the time comes.


Everything Else You Should Be Doing

In financial times like today, it is increasingly important to make sure you are on top of your finances and seize every financial opportunity that comes your way, no matter how small. Be smart about your money. For example, if you have credit card or other debts, pay them off. Make sure you have an emergency fund and find an account to keep it in where you are at least making more than 1% return each year. Make sure you are contributing to matching employee accounts and watch your spending habits. Bottom line, every financial decision we make today can make a difference in our future.

(This has been a guest post by Jeff Rose, an Illinois Certified Financial Planner  and also offers term life insurance in Illinois who authors the blogs Good Financial Cents and Soldier of Finance. He is a father of 3 awesome boys, husband to the coolest chick on the planet, In-N-Out Burger junkie and Crossfit addict.)

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Written by Jon the Saver

This post was written by yours truly, Jon Elder. My mission is to help you succeed in your personal finance life. Join me on the journey to financial freedom! You can subscribe through RSS FEED or EMAIL updates. You can also find me on TWITTER
. Happy investing :)

Jon the Saver

This post was written by yours truly, Jon Elder. My mission is to help you succeed in your personal finance life. Join me on the journey to financial freedom! You can subscribe through RSS FEED or EMAIL updates. You can also find me on TWITTER and FACEBOOK . Happy investing :)

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  1. Up until a few years ago I spent so much time trying to fnd the “right” investments that any swing in the market drove me crazy. I found that I slept much easier at night with a diversified group of mutual funds and etfs with auto-invest (for the mutual funds at least – the etfs have an amount going into an account each week and I invest that manually in the etfs). So for me, keeping it simple with money I don’t need for at least 5 or so years helped me get through all of the swings. Two cents.

    • Jon the Saver says:

      I’m right there with you Nick. I’m all about simple, straight forward investing strategies. I sleep better at night too! I’m with Vanguard myself.

  2. I’m still contributing through the down market. It will work in the long term, but still sucks to see the net worth go down in the short term. I’ll skip Roth conversion because I’m pretty sure my tax rate will be lower after I retire…

    • Jon the Saver says:

      Same here! It doesn’t matter whether the market is up or down, i invest the same amount of money each week.

  3. Diversity is a big one. Putting all your money into one type of investment like stocks or property isn’t a wise move in my opinion. As they say, don’t put all your eggs in one basket! -Sydney

  4. I go for straightup indexing and diversification as well as asset balancing. The terms sound tricky but the strategy is quite simple! Helps to keep my emotions from coming in and mucking things up. ;)

  5. Down markets can be opportunities for the right value stock. Helps to stay the course, and have plenty of cash on hand.

  6. Free Share Tips says:

    Yes Diversification of the Portfolio is very good thing as it can balance the investment in different segments. Finding the good stocks and investing at right time is the smartest thing to invest in stock market. Nice described article wrote and published. Keep up the good work.

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