Five Tough Time Financial Fixes
During market volatility when one is faced with unexpected financial outcomes it can be stressful to keep one's financial plans on track. This article will provides the reader with five things one can focus on to help them keep their financial house in order.
When The Surf Is Up, You Should Ride the Waves
When there are dramatic fluctuations in the market you have the ability to buy the "dips". Basically when the stock prices are in a very volatile state the prices could be down your next paycheck when you're contributing into your 401(k) plan. What this means is that you'll be getting many more shares for the money you're putting in.
As an example, if one puts down $500 into a stock fund for one's 401(k) every month and the market is dipped on one's payday, this would be good as one receives more shares for their money than if the markets were up. One could view such market conditions as everything really being on sale.
Buy Low, Sell High
It is almost inherent to our natural psychological nature, we want to invest in winners. Nobody wants to be part of a loosing team. However, in reality, there are economic cycles and all stocks go up and down. Ultimately, one will have to resist always wanting to invest in the winners as you may be getting in just before a dip. If real estate and bonds have been going up and up it is likely a good time to move on.
Is real estate going to go up higher? It's possible but it's highly unlikely that you're going to see a strong surge that's similar to what's happened in the past. Real estate is going to level off and stocks are in a very strong position for recovery. When it comes to the long term the stocks really provide you as a long term investment strategy.
Don't Run For Cover
When faced with market volatility it is really a time to bunker down and hold on to your positions. As a long term investor one has to appreciate that when markets do turn back up, stocks often make a sharp up turn and a full recovery. Therefore, selling during a rough time is not the plan. One has to hold their position and understand that they are playing out a long term plan.
Long term investors do not throw in their chips when the markets turn sour. Once in, it is better to be part of the eventual return of the Bull market to have avoided the Bear. Back in 92-01 the S&P 500 had a 175% return on investment. All those that bailed out on their investment missed out on these heady times where it was almost like discovering free money.
Stash Your Cash
You don't ever want to be cash poor and have to sell off your assets when it's time to fund your needs. A bear market will rarely last for anything more than a three year period so you should keep that same amount of money in liquid funds. If you need to have some cash to supplement your income, buy a house, or send your child to school within a year or two to three then you should stay in liquid money market accounts or CDs. In order to pay for your short term needs you should make sure that you're more concerned with the return of your money rather than on your money itself.
Stop, Look, Listen
You really need to try to stop worrying. Look at the position that you're at now and then listen to the advice of a trusted financial adviser. Creating a strong financial plan is just what the doctor ordered and the promise to get yourself back on track and begin moving toward your future when you come to the times that you feel you've lost your way.
Article Source: FxTradingStock.com
About the Author
Learn more about a budget software. Stop by Tiffany Roberts's site where you can find out all about budgeting for women.
by: Tiffany Roberts
Total views: 20
Word Count: 675
Date: Fri, 28 Jan 2011
Publish/Share this article
To use this article on your site click here to get the HTML code
Rating: Not yet rated
Login to vote
Related Articles
How to Invest in 2011 and Beyond Without a ClueWhat Is Forex Trading?
Quick Way To Trade In Shares
ATM Calendar Spreads, Are You Aware Of The Hidden Gotchas?
Emini Day Trading Requirements
The Coming Death Of The Dollar
Fantastic Fundraising Suggestions
Winning Big In The Share Market
