You know, it's coming, the stock market will eventually crash,
so let's be prepared and be able to survive the stock market crash when it
comes, because if we are prepared, we shall not fear.
I am Tiffany Thomas with Wealthy
Tiffany Dotcom, and I achieved financial freedom at age thirty eight.
So if you want to achieve financial freedom at a young age as well,
hit that like button and hit the subscribe button and we're going to dive right in.
In order to be prepared and be able to survive a stock market crash,
we need to understand very quickly how the stock market actually works.
The stock market is made up of a whole
bunch of different companies, and you can choose what you invest in.
You can buy a piece of a company or
a share of a company, and then you will own a piece
of that company, or you can do multiple shares or multiple companies.
And the stock market is based on fear and greed, and it goes up and down over time.
But over the long term, it continues to rise.
And here's what I'm talking about when I say it's based on fear and on greed.
When a person chooses to invest in a certain company, that price goes up.
As more people invest in that company
and people become greedy and think, oh, I need to invest in that company as well.
So they buy shares of that company and the price continues to rise.
And then people will think, oh, this is a really high price.
Maybe I will sell the piece of that company that I own.
And a lot of people start to think that.
And then the price starts to drop
and people become fearful and think, oh, maybe I need to get out of this company.
It's not doing well anymore.
So they sell based on fear.
So a price will continue to rise and then it will drop down and then rise and so on.
So when lots of people are investing in the stock market, in lots of different
companies, you'll see the stock market start to go up and then start to go down.
So people become greedy and then they
become fearful and then they repeat that cycle.
They become greedy and then fearful.
But we want to make sure that we are not
basing our investments off of fear and off of greed.
I'm sure you've heard the saying before.
It's not timing the market, but time in the market.
We aren't trying to time the stock market just right so that we get in at a really good
price and then sell it off when it is really high.
That's called timing the market.
We want time in the market.
So we choose really good investments, really good companies to invest in.
And then we hold our investments
for the long term because we've chosen good investments.
We don't want to buy high and sell low.
We want to do the opposite.
We want to buy when it's low and then sell when it's high.
That's a very basic rundown of how the stock market works.
So now that we know that, let's talk about how to be prepared
for when a stock market crash will happen, because we know it's coming,
it's inevitable, and how we can survive during the crash.
All right. There are four things we want to do
in order to prepare for a stock market crash.
The first one is to get our finances in order.
We want to know how much money is coming in and how much money is going out.
The way that I like to do this is by using
a spreadsheet because I'm kind of a nerd and then also using a free app.
It's called Personal Capital.
And I like doing the spreadsheet because I can update my finances every month and I
can make sure that I am on track for where I want to be.
And then with personal capital, I have all of my financial institutions
hooked to personal capital so I can see my finances in just one place,
very, very quickly.
You can hook your credit cards, your mortgages, your 401k's,
your Roth IRAs, your checking savings, anything that's related to money.
You can hook it to personal capital
and then you can see an update of all of your finances in just one place,
very, very quickly. If you are interested
in signing up for personal capital, I will leave an affiliate link below
and you can get a free twenty dollar gift card to Amazon when you hook one
of your retirement accounts to personal capital.
But it's just a really simple way to keep an eye on your finances and track your
money very easily so that you can make sure your finances are in order.
And you don't forget about any
subscriptions that you might have signed up for, or a bill that you haven't paid.
And another thing with getting your
finances in order is to make sure you have an emergency fund set up.
And a lot of people recommend doing three
to six months worth of expenses for an emergency fund, which is fine.
I personally do a little bit different and I created a video for you.
So I will leave a link above and below in the description.
You can check that out after this video's over.
But I like to keep it very simple and only keep the minimum amount that you would
need in an emergency fund so that you can have as much of your money working for you
as possible and going along with keeping your finances in order.
You want to make sure and keep track of all of your debts that you have
and that you are paying down any high interest debt that you have as quickly as
possible so that you can invest more of your money.
And I did
just create a video about knowing whether to invest your money right now or pay off
debt, so I'll leave a link to that above and below and you can check it out later
once you know that your finances are in order.
The second thing you want to do to prepare
for a stock market crash is to have an opportunity fund.
And this just means having a certain amount of money set aside that you could
invest in something when that opportunity comes about.
And honestly, it could be saving for a down payment
on a house, or it could be when the stock market crash happens.
But it is nice to have a little bit
of money set aside for that opportunity that could come up.
And you don't want to have too much money just sitting in a savings account.
You want to have as much of your money working for you as possible.
So I get that not everyone has an opportunity fund.
And just as a side note, you could pull some of your emergency fund
to an opportunity fund and then replenish your emergency fund.
But you'd want to make sure that you still feel comfortable with the amount of money
that you have in case an emergency did come up.
The third thing to do to prepare
for a stock market crash would be to increase your income streams.
And this means having more than just one source of income.
So you're not just getting a paycheck from your nine to five job,
but you could have a little side hustle going on or some type of investments.
And if you're curious to know what
my income streams are, I do have a video for you.
So I will leave a link above and below and you can check that out later on.
But it's just nice to have different sources of income so that you're not
relying on just one source in case that source did go away for some reason.
And the fourth thing to do to prepare
for a stock market crash is to diversify your investments.
I personally invest in real estate and in the stock market and in my own business.
So if one of my investments is not going
so well, I can focus on my other investments.
I don't just have one to rely on. All right.
Now that we have prepared for the stock market crash.
Let's talk about how to survive during
that stock market crash, because we know for sure it's going to come.
We just don't know when.
The first thing we want to do is remain
calm and do not freak out and sell all of our investments.
That would be the wrong thing to do.
And I don't know if you've heard of JL Collins, but he wrote the book
The Simple Path to Wealth, which is a really good book.
I'll leave a link below
in the description and you can read that in your spare time.
But he also created a meditation video for when the stock market does crash.
So I'm going to leave a link below in the description to that meditation video.
And if you really do get nervous and you
think you are going to freak out during the next crash, put on this meditation
and relax and just follow his advice in the meditation video.
And while it is a little bit silly,
it's also nice for those that really do freak out.
And then during the crash,
we want to remember why we bought those investments in the first place.
Are they still good companies?
Are they still good investments?
Most likely the answer is yes, because during a stock market crash,
everything is crashing, everything is falling, all of the prices are dropping.
It doesn't mean that companies have gone bad.
They're going bankrupt or anything like that.
But something is going on in the world
where we have created this stock market crash.
So still, hold on to your investments unless something specific has changed
about that company that you don't like anymore, because we don't want to become
fearful and sell all of our investments and then lose out on all of this money,
the next thing we want to do is to continue to invest like normal.
If you have your investments set up on automatic transfers,
then just keep investing in the stock market because we know for sure
that the stock market will rise over the long term.
Don't get nervous and stop investing altogether.
That is not going to help our investments grow.
And like I mentioned earlier,
if you do have an opportunity, fund, some extra money sitting
on the sidelines, then you can invest it during the stock market crash.
And keep in mind, it might go down a little bit further
after you invest your money or it could come right back up after.
We're not sure.
We aren't trying to time when the crash is
going to happen and invest at the very, very bottom.
We are thinking more long term and we want
to have our money invested in the stock market as long as possible.
To give you an example,
in February of 2020, the stock market started to go down.
And if you would have invested your money
in February and then saw what happened in March, because it continued to go down
in March, you would have thought I invested at the wrong time.
But quickly after that,
the stock market had come back up and even surpassed where it was before.
So if you wouldn't have invested any money
at all, you would have lost out on all of those gains.
And while it would have been nice
to invest right at the bottom, we can't predict when that will happen.
So once we see that crash,
we can get our money in and then just leave it there for the long term,
knowing it will come back up and even surpass where it was before.
And the next thing in order to survive a stock market crash is to be flexible,
especially if you are living off of your investments from the stock market.
If you had a trip planned to Hawaii when
the stock market crashes, then maybe you can postpone that trip
and take that Hawaiian vacation the following year.
Or maybe you can get a part time job and just create a little extra income
until your investments come back up to where they were.
And if you think you're still going to have a hard time during the stock
market crash, the last thing I want to recommend is to not look at your
investment accounts and avoid the media as much as possible.
There will be a lot of talk going on about
how the world's coming to an end and the companies will never recover.
And you need to pull out all of your investments right now.
So stop looking at your investment
accounts and avoid the media as much as possible so that you can continue
to remain calm and just be consistent, continue to invest and think more long
term and realize the stock market will increase over the long term.
All right. Comment below and tell me if you are going
to be able to survive the next stock market crash, because we know it's coming.
We just don't know when it's coming.
And if you found this video helpful, please hit that like button and share it
with someone else who would like to hear this information.
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Thanks so much for watching.
I'll see you in the next video.