Investing During a Market Crash

Whether you’re a seasoned investor or just starting out, it’s important to be aware of the dangers associated with investing during a market crash. Here are some key things to watch out for.

Overly optimistic forecasts

A lot of new investors rely on rosy predictions of rising share prices. But the truth is that no one can accurately predict the future. It’s impossible to know exactly what is going to happen in the markets next week, next month or even next year. So it’s not a good idea to make major investment decisions based purely on predictions made by other people.

The only way to ensure that you make a good long-term investment is to do your research and invest based on your own personal circumstances. Always stick to your strategy and avoid getting carried away by the latest ‘hot tip’ from the talking heads on TV.

How To Start Investing During A Market Crash?

When it comes to making an investment, a lot of people are lured into trying to time the market and make money from short-term fluctuations. However, this is a very risky strategy that can lead to disaster if you get it wrong. Instead, you should always look to make long-term investments in good companies. That is the key to making money through the stock market over the long term.

Do your research and make sure that you are buying shares in a company that is undervalued and has the potential to increase in value over time. Having a longer term approach to investing will help you to avoid getting caught up in the hype of the daily ups and downs of the market.

Diversification is key

While it can be tempting to put all your money into a single stock, this is a recipe for disaster during a time of high volatility in the markets. This is because having all your eggs in one basket means you are putting all your eggs into one basket. If something goes wrong with that particular company, then you are going to lose everything that you have invested in it.

Don’t Put Your Eggs in One Basket

This is why it is important to have a diversified portfolio of stocks across several different sectors. This allows you to spread the risk around so that if one sector crashes, it will not have a major impact on your investment portfolio as a whole.

If you have already done putting all your eggs in one basket. Then it is a good time to start looking for more eggs.

Emotional investing

The normal process of a bear market follows a sequence of emotions such as denial, anger, bargaining and depression. That is why it’s important to have a disciplined investment strategy that is based on facts and figures rather than your emotions.

With the wide reach of social media, it may be discouraging to see others making large profits in the stock markets. It is important not to be envious of them. In my opinion, being envious of someone means that you feel that you are capable of achieving what the other party has. For example, I would never feel envious of Lebron James as I know that I can never be as good as him. But if you are envious of your, say, army friend who made money in cryptocurrency trading, it means deep down, you know that you can do it too. In other words, use envy in a positive way and work hard towards your goal of achieving your financial goals.

What’s a Little Envy?

Whenever I am overwhelmed by what is going on in the market, I will shut off and take a break for a while until things settle down a bit. Then I will look at the big picture and try to get my priorities in order. This prevents me from making rash decisions. Sometimes doing nothing is better than doing something that is not well thought out.

It’s always better to be smart and patient when it comes to making investment decisions. So take a deep breath and just wait for the dust to settle before jumping back into the market again.

5 steps to investing during a market crash

1) Don’t panic sell. During a market correction, it’s normal for stock prices to go down temporarily. This is not a reason to panic and sell off all your shares. Just stay calm and wait for the market to recover before you make a decision.

2) Keep calm and maintain a balanced portfolio. Having a diverse portfolio of stocks across multiple sectors will allow you to spread the risk around. This will allow you to ride out the storm and avoid taking a huge hit in your portfolio when certain sectors are underperforming.

3) Set a spending budget. It’s easy to get emotionally attached to a particular stock or investment and become too optimistic about its performance. This can lead to you overextending yourself and racking up big losses in the long run. To avoid this, you need to have a clear monthly budget and stick to it.

4) Stick to your long-term investment strategy. Trying to time the market can make you lose a lot of money over the long run. Instead of trying to predict where the market is heading next, you should invest based on your long-term financial goals. This will ensure that you have enough funds to meet your retirement goals and other financial obligations in the future.

5) Start looking for more eggs. As the saying goes, “The greater the calamity, the greater the profit.” This means that there will be more opportunities to make profits when the market is experiencing a period of uncertainty. So don’t let this scare you away from investing.


4 things to look out for when investing during a market crash

1) Don’t buy on impulse. – Remember that there’s no point buying an investment just because you want to get your hands on it. First, make sure you’re buying it for the right reasons, such as as part of a long-term investment strategy. Buying a dip just because it dipped is a recipe for disaster!

2) Watch out for fake news. – The proliferation of fake news on social media makes it easier for people to spread rumours that can easily undermine investor confidence in the market and cause panic selling. Steer clear of speculation and try to focus on the facts.

3) Read up. – One of the best things you can do if you want to invest in the stock market is to follow the advice of experts. They have the knowledge and experience to navigate through a market downturn without breaking your investments. I like to sieve my news through Fintwit and Seeking Alpha to get an objective view of what’s happening in the markets. This allows me to make better-informed investment decisions.

4) Be smart with your money. – Finally, remember to be smart with your money by making sure that your investments are appropriate for your goals. For example, if you have a shorter term financial goal to meet, it is more beneficial to invest in low-risk investments instead of high-risk ones. This is because the former can deliver higher returns at a lower cost of capital than the latter.


It’s normal to have fears during a market crash, but it’s important to have a long-term view and think rationally about what you’re doing. If you stay the course and focus on your long-term goals, you’ll be able to come out on top in the end.

Investing during periods of market uncertainty can be challenging, especially if you’re a new investor who hasn’t lived through a crisis before. But don’t be discouraged. Any experience you have in these turbulent times will only make you a more resilient investor in the future. Above all, remember that you should always invest based on your own financial goals. Keep it within your circle of competence. Do not try to follow what others are doing or what’s popular at the moment.

I hope this has been helpful and I wish all of you the very best in your investments!


Hope you enjoyed this piece. If you like to read more of my case studies, click here.

One thought on “Investing During a Market Crash

  1. Income diversification is actually how you can sustain yourself over a long period of time, even in recession.

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