7 Realest Ways on How to Protect Yourself from a Stock Market Crash

There are signs that a stock market crash is on the way. The current bull market has lasted the longest in history. The bond yield curve is inverting, with longer-term interest rates lower than short-term yields; historically, yield curve inversion has preceded many U.S. recessions. For example, the curve inverted in 2007, just before the collapse of the US equity market. While avoiding investing in the market is the only guaranteed way to protect your money from the next crash, the average 9 percent stock market return from long-term investments may be worth it. If history is any guide, patient investors will profit from putting some of their money at risk.

The stock market can be volatile and unpredictable, and while crashes are rare, they do happen. Here are some tips on how to protect yourself from a stock market crash:

1. Diversify your portfolio: Diversifying your portfolio means investing in a variety of stocks, bonds, and other securities to spread out your risk. This can help cushion the impact of a stock market crash on your overall portfolio.

2. Invest for the long-term: Investing for the long-term means holding onto your investments for several years, even during periods of market volatility. This can help you ride out short-term fluctuations in the market.

3. Use stop-loss orders: A stop-loss order is an order placed with your broker to sell a stock if it falls below a certain price. This can help limit your losses in the event of a market downturn.

4. Keep an emergency fund: Keeping an emergency fund can provide a buffer during tough times. Aim to have at least 3-6 months of living expenses saved in a separate account that you can access in case of an emergency.

5. Avoid emotional investing: It can be tempting to panic and sell your investments during a market crash, but this can actually hurt your portfolio in the long-term. Instead, stick to your investment strategy and avoid making emotional decisions.

6. Stay informed: Stay up-to-date on the latest news and developments in the market. This can help you make informed decisions about your investments.

7. Consider professional help: If you're unsure about how to protect your investments from a market crash, consider working with a financial advisor who can help you develop a plan that suits your needs and risk tolerance.

In conclusion, while a stock market crash can be scary, there are steps you can take to protect yourself. By diversifying your portfolio, investing for the long-term, using stop-loss orders, keeping an emergency fund, avoiding emotional investing, staying informed, and considering professional help, you can weather the storm and come out on the other side.