Swipe to the next slide for a quick overview of why the stock market is falling and how you can prepare?
As of June, the S&P 500 is down 8.5%, the Dow Jones Industrial Average (DJIA) is off approximately 7.2%, while the tech-heavy Nasdaq Composite is down nearly 8%.
A war between Russia, Ukraine, and NATO allies had a more severe impact on oil and other commodity prices than an all-out conflict between the countries.
Oil prices increased all over the countries and create a negative impact on economies. In the USA the Inflation rate touches 8.6% in May. (Highest Since 1981)
In response to inflation, the Federal Reserve raised its interest rate by 75 basic points, one of the most aggressive increases in nearly 40 years.
The cost of credit increases due to the interest rate hike. Businesses and consumers spending less cause the companies' earnings to fall and the stock prices to drop.
Due to stock prices falling equity is less attractive and people shift their money from equity to other instruments like Gold, Bond, and other interest rate products.
All these factors indicate that the economy is not in a healthy state to support the stock market. We are at risk of a recession and will see this with our pocketbooks.
Here are the 3 things or strategies that investors can utilize to minimize the impact of a stock market fall/crash on their investments portfolio.
Markets have always recovered from a crash, so timing the market does not work well. You should just stay calm, avoid panic buying or selling, and allow SIPs to continue.
Diversification and Asset allocation help your portfolio to reduce risk and losses. Focus on what am I invested in, the value of investments, and financial goals.
The S&P 500 index has returned a historic annualized average return of around 10.5% In the last 60 years. So don't worry about today's crash/fall and take it as a long-term.