I wrote about What to do in a Market Correction previously, but How do we weather a Market Correction?
It doesn’t matter whether the Market is Up or Down, I still live my Rich life just like the Mexican Fisherman.
So firstly, just live your daily life as it should be during a market correction.
Don’t let the market swings affect your Rich life!
Let me share a few tips that would help you weather a market correction:
Have a rainy day fund
When everything is nice and rosy, don’t spend all your earnings. Save some for rainy days. You never know when your car would break down, lose your job, fall sick etc.
Have dry powder to invest
Although JP Morgan Asset Management data shows that by staying fully invested, the return is the highest. I know it feels really bad to see company stocks on bargain and not have the cash to invest. Therefore I keep sufficient dry powder to invest during a market correction.
The bright side is this dry powder could potentially be your rainy day fund cushion if need be. The psychological effect of knowing I got something to fall back onto is PowderFool. (pun intended)
Never ever invest with money that you don’t have. That’s a big NO-NO! Imagine borrowing money from a Loan Shark, if you don’t have the money, they will beat you up!
Over-leverage might not be that extreme, or some might argue it’s worse as it could cripple you financially.
don’t worry be happy
Just regularly buy and forget good companies or index. Don’t check the market so you don’t have to worry. Live your daily life and be happy 😉
The market is there to serve you, not instruct you. So don’t get too engross in these short term swing. As long as you are not overleveraged, you could easily weather a market correction and live a Rich life.
Next I shared 4 Simple Ways to Invest in Volatile Markets.
If you would like to share any other tips, please leave your comments below.