How To Invest In A Bear Market – Whiteboard Wealth #2
There’s a big difference between savers and spenders. Savers want the market to drop – or you SHOULD anyway! Spenders don’t, they want the value to rise. This video is for savers who want to know how to invest in a bad market, not spenders who need to know how to plan for a bad market.
I want to completely flip the way savers think and feel about how to invest in a bear market! It’s so easy to be frustrated and upset when the market goes down, but you must consider the alternative, which is the market rising. For savers, you don’t want to invest in the markets higher, you want to invest in the markets while they’re lower, depressed, in bear territory etc.
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Want to know the secret of investing in the stock market?
Yes I’ll sound like a broken record, but have a financial plan which is grounded in your financial goals – but more specifically is actually designed to weather the storm! If your financial or retirement plan has bear markets throughout history incorporated into the results, you’ll be well on your way to giving yourself some peace of mind!
In addition to having a plan which takes into account bear market ups and downs, you should have some formal strategy in place. For us we use what’s called a “bear bucket” strategy. That simply means having a certain chunk of liquid and stable funds set aside to draw from when the market heads south. This allows us to continue to rebalance and actually buy stocks when they’re cheap!
Another strategy would be our “bear slider” concept. This entails ratcheting up your allocation to stocks after your bear bucket is exhausted (if it gets exhausted). By jumping up your stock allocation by 1% a month, you should be able to maintain your exposure to stocks because you’ll generally be selling more bonds for extended bear markets. Granted, each investor is different and so is the math, but that’s a general idea.
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