On Monday, the stock market had its worst decline since 1987. Although the market is currently attempting to rally, investing is definitely going to feel riskier than usual for a while.
Now that we’re in a bear market, what should you do with your money? It might depend on how old you are—or how soon you might need the cash.
If you’re a millennial (or thereabouts)
CNBC proposes a three-pronged strategy, which we think is especially helpful for people who have more time before they retire.
Get your emergency fund squared away first
If you don’t have enough cash set aside to cover at least three months of typical expenses, make that your priority. The last thing you want to do in a bear market is pull money out to cover basic costs of living; you want to leave your investments exactly where they are and give them the chance to grow again. (Remember, stock losses don’t count until you sell.)
Continue dollar-cost averaging
Invest on a regular basis, whether the market is up or down. As CNBC’s Karen Gilchrist puts it: “Time in the market is more important than timing the market.”
Choose low-cost index funds or ETFs
Pick investments that cover the entire market, instead of pinning your luck on a select set of stocks.
If you’re closer to retirement
What about people who are a little closer to retirement, and are thinking more about getting their money out of the market than putting money in?
Money.com offers this advice:
Try to hold out until the recovery
The market is very likely to go up again. Maybe sooner than we expect! Selling now means locking in your losses before they have the chance to turn back into gains.
Sell off fixed-income investments and bonds first
If you need to sell some of your investments to cover the cost of living, start with the ones that have experienced the lowest loss of value. If you sell your fixed-income investments and bonds and still need to pull money out of the market, choose your highest-performing equities.
Remember, I am not a professional investment advisor—so make sure you talk to a financial advisor (preferably, a fiduciary) if you want specific advice on how to manage your investment portfolio.
Otherwise, set aside the cash you need to cover any upcoming emergencies or life expenses, continue investing if that’s your jam, and try to avoid selling any stocks until the market rebounds.