3 productive things to do when supplies run out | Smart Change: Personal Finance

(Maurie Backman)

At this point, it’s painfully clear that stocks are in a protracted slump. Last week the S&P 500 index plunged into bear market territory. And other major indices have fallen significantly to date as well.

A downturn in the stock market has the potential to mess with your head in a very big way. And so a good guess at this point is to not check your wallet balance every day. If you do, you tend to be disappointed at the very least. Worse, you may be tempted to panic sell investments, locking in losses that might otherwise be avoided.

But while it’s not a good use of your time or energy right now to check your portfolio on a daily basis, there are some steps that are worth taking given the stock market condition. Here are a few that are worth tackling.

Image source: Getty Images.

1. Rate your savings

During a stock market downturn, you will only lose money if you liquidate investments when their value has fallen. And if you have enough cash reserves, you don’t have to think about it.

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That’s why it’s a good idea to check your emergency fund and make sure it’s up to scratch. Keep in mind that the cost of living is rising these days due to inflation, so while your savings may previously have been enough to cover three months’ worth of bill, they may now only be enough to cover two and a half months’ worth.

If you’re not happy with your savings, do your best to filter more money into your emergency fund over the next few weeks. We don’t know how long this current bear market will last, but it’s important to have a nice cushion on the couch, just in case it lasts longer.

2. Create a wish list of stocks you want to buy

Bear markets can be unsettling, but they can also open the door to buying opportunities. Therefore, now is a good time to list the stocks you want to own and put money aside to pick them up while they are discounted.

Of course, you don’t have to stick to individual stocks if you’re more comfortable investing in long-term index funds. But if you tend to buy stocks of individual companies, spend your time and energy researching those companies to see which ones are right for you.

3. Find out if your life plans need to change

If you don’t plan to tap into your portfolio any time soon, don’t worry about the state of the market. But if you’re planning to retire in a few years and you rely heavily on your stock portfolio to make that happen, you may need to reassess.

Of course, the current downturn in the market we’re struggling with could be quite short-lived. But since we can’t predict how long it will take, it’s a good idea to spend some time thinking about your options if big plans need to be tweaked.

Make good use of your time

Checking your portfolio all the time when stocks are falling isn’t a great way to spend your time, and it certainly has the potential to increase your stress levels. Instead of doing that, tackle the moves above so that you start doing something productive at a time when you may be feeling helpless.

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