3 Productive Things to Do When Stocks Are Tanking | Personal Finance

(Maurie Backman)

At this point, it’s painfully clear that stocks are in an extended slump. Last week, the S&P 500 index plunged into bear market territory. And other major indexes are also down significantly year to date.

A stock market downturn has the potential to mess with your head in a very big way. And so a good bet right about now is to not check your portfolio balance every day. If you do, you’re apt to get bummed out at the very least. And worse yet, you may be tempted to sell off investments in a panic, thereby locking losses that might otherwise be avoidable.

But while checking your portfolio daily is not a good use of your time or energy right now, there are some steps worth taking given the state of the stock market. Here are a few worth tackling.

Image source: Getty Images.

1. Assess your savings

During a stock market downturn, you only lose money if you liquidate investments when their value has dropped. And having adequate cash reserves could make it so that’s not something you have to think about.

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That’s why it’s a good idea to check up on your emergency fund and make sure it’s up to snuff. Remember, living costs are up these days due to inflationso whereas your savings may have previously been enough to cover three months of bill, they now may only suffice in covering two and a half months’ worth.

If you’re not satisfied with your level of savings, do your best to filter more money into your emergency fund in the coming weeks. We don’t know how long this current bear market will last, but it’s important to have a nice cushion in the bank, just in case it’s prolonged.

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

Bear markets can be upsetting, but they can also open the door to buying opportunities. That’s why now’s a good time to make a list of the stocks you want to own and start setting money aside to scoop them up while they’re discounted.

Of course, you don’t have to stick to individual stocks if you’re more comfortable investing in index funds for the long haul. But if you tend to buy shares of individual companies, spend your time and energy researching those businesses to see which are a good fit.

3. Figure out if you need to change any life plans

If you’re not planning to tap your portfolio anytime soon, then there’s really no need to panic over the state of the market. But you may need to do some reassessing if you were planning to retire in a couple of years and you’re heavily reliant on your stock portfolio to make that possible.

Of course, the current market downturn we’re grappling with could end up being fairly short-lived. But since we can’t predict how long it will last, it’s a good idea to spend some time contemplating your options if big plans have to be adjusted.

Make good use of your time

Checking your portfolio all the time when stocks are down isn’t a great way to spend your time, and it certainly has the potential to send your stress levels soaring. Rather than do that, tackle the above moves so you’ll be doing something productive at a time when you may be feeling helpless.

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