How to Protect Your Net Worth from a Market Crash

Stock Market Crash

The stock market can crash at any point in time. Let us investigate some history of the stock market.
Let’s go back to the early 2000s. for the next 7 years, everything was looking good. Stocks were increasing, people were making money & everyone was happy until it came to October 2007.
Stocks just started a crash out of nowhere. There was too much debt in the system, there was too much money borrowed for houses & it was game over. Things started to fall.

Let’s take another example. We’ll go back a further 10 years from that period. Before the year 2000, it was a great bull market.
You had all of these new technologies & internet companies coming up into the setup & people were excited about this.
People were paying high prices for stocks. It didn’t last long though because stock prices were starting to crash from 2000.

We are currently in a bull market cycle that has lasted 15 years. We’ve got a lot of debt in the U.S. system, people are more excited about stocks & we are at all-time highs.
The truth of the matter is that it could crash at any point in time.

When I say cash, I don’t mean cash as cash in hand or cash in the savings account. I’m talking about the cash that is earning interest. You can keep your cash in high-interest savings accounts. Here are some high-interest paying savings accounts.

Also, you can follow what Warren Buffett puts his cash in which is a treasury bill.

When prices of the stocks look very cheap you can put your cash & buy some stocks. The perfect time for buying stocks is when everyone is fearful & all of them want to sell their stocks.

Gold is a hedge against a stock market crash. When we look at the housing bubble in 2008, during the period S&P 500 index crashed almost 50% which lasted from October 2007 to March 2009. Almost one & half years.
Let’s look at the price of the gold during this period. From October to March 2009 gold prices increased. When investors lose their trust in the stock market they invest their money in gold. People want to keep their money safe during a market crash & gold is a safe heaven for protection.

Some stocks pay dividends even in a market crash. Try to find some companies you understand & pay high dividend yield & buy those stocks for low prices in a crash.