The Stock Market Has Dropped! No Need to Panic

Good morning 9-5 Rebels!

Grab your coffee and enjoy.

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Do you panic when the stock market drops because all your financial dreams are disappearing? Or…

Do you have a solid financial plan, understand the market will go up and down, and have a safety net that doesn’t change when the stock market does a normal pullback?

If you answered the first question with a “yes”, then you cannot answer the second question with a “yes.”

One negates the other.

One is rational.

One is in your control.

You choose to focus on finances and planning.

You choose to understand the market moves and the historical patterns.

You choose to build a safety net of savings, skills, and income.

Whether the market goes up or down is NOT in your control, so don’t let it take over your mental space and keep you up at night.

Here’s what you can do, by choosing and taking action -

Build a financial plan:

Live within your means. This means LESS than you take home. Start small, with a monthly challenge. If you can’t (or choose ;) not to) cut more expenses, then see if you can increase your income.

Create short and long-term goals and savings. This takes focus and time. Think about what you want, what you dream of, and what is feasible. Write them down!

Plan a retirement that considers the impact of inflation. If you’re thinking about a dollar amount you need in retirement, make sure your calculations factor in rising costs. Many retirees are suffering right now and it doesn’t have to be you.

Understand the patterns of the stock market:

Historically increases but has regular (healthy) pullbacks. This is normal. You may not have experienced it before, or in the last pullback you didn’t have a lot of money invested yet, but it is. And those that jump out from fear will miss out when it goes back up.

A market that has increased 100% in the past two years isn’t going to last. You were probably thrilled by the massive increase in the market the last few years. Did you think that would last? The 20-year average stock market return is 7-ish% a year. That means up AND down years.

Invest in index funds if you don’t have time to study individual stocks. You don’t have to be a stock market expert to invest. And you don’t have to pay large fees. Start small - your company’s 401k plan or your own Vanguard or Fidelity account. Invest in an S&P 500 or total stock market index fund (VTI). Keep investing.

Create a safety net:

Build an emergency fund (or know where you can get short-term funds from). Your credit card can be a life-or-death fund, but it’s not a financially healthy solution. Start saving a bit (anything you can spare a month) until you reach $500. Stick it in a savings account for those unexpected life moments - car breaks down or unexpected doctor bill.

Learn new skills and knowledge to keep you relevant for jobs. Cutting expenses is one option, but I’d rather make more money - I like to travel too much. Keep your skills up, learn new ones, and be ready to take advantage of opportunities in your career. Even if you’re happy now, these habits will prepare you for the unexpected - job layoff.

Develop multiple steams of income. Whether you want to build your emergency fund, retirement fund, or travel fund quicker - or just want another cushion from a potential job loss - not relying on a single job for your income is a mental relief. Figure out if you have hobbies that can make money, or ask friends if they need any help. It all adds up.

Whatever you do, don’t panic.

Be rational and plan.

Focus on actions that are in your control and ignore the rest!

You got this, I know it.

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Let’s create and support more rebels together.

I hope you all have an amazing week!

Quinn