Tips for How to Survive a Stock Market Crash

Even if the market crashes, the following five tips will help you to get regular income apart from keeping your investments safe.

Every one wants to maintain liquidity throughout their life. It may be towards buying a house, education of children or for comfortable retired life. If money dwindles, we become panic. But if the following five suggestions are followed, one can certainly survive.

Increase in life expectancy: With the raise in life expectancy, it is necessary that we have to retain the equities or other investments to meet life's requirement.

Balancing or reinvestment: Careful balancing of investment is the need of the hour. Suppose there is an increase of say about 10% in International portfolio, it is advisable that you invest that 10% in another new sector. In Stocks, loss accrues only when we sell the Stocks. So, instead of trading stocks, invest the profit of 10% mentioned above from International portfolio in some other area. By this you can offset the loss.

Diversification: Diversify the investments. There are mutual funds which have been registering higher growth although other sectors are incurring losses. So, investments in mutual funds are quite comfortable. If you are planning to invest in mutual funds, before choosing your investment you have to take a calculated and safe risk. Depending on which class of assets like either a large or medium or small cap of assets where we have invested, one can decide on the plans to diversify. Momingstar.com will help you on this.

Decide now: Of course, we cannot control market. But we can certainly control our personal investments. When you feel market is favorable, you just decide and act. Do not look for bottom because we are unaware where the bottom is.

Annuity plan: Investing in fixed annuity appears to be wise. Because, irrespective of market there is a guaranteed flow of money. For the lump sum of money you have invested, you get an assured annuity periodically. There is no risk to the investment. Income is guaranteed for life and the benefit can be extended to spouse also. But a word of caution is that the insurer should be a financially very strong.

What Floyd Odlum made during the great depression is of very relevance now. He invested in stocks during depression and earned huge profits later when the market surged upward. He used to say 'there is a better chance to make money now than ever before'.

If the above five suggestions are followed, irrespective of market position, one can certainly keep enough money for his future needs also.