Suze Orman says you can avoid 5 common mistakes people make in a stock market crisis
Alarm bells are ringing out on the stock market, and personal finance expert Suze Orman has heard them along with you and has advice as you warily watch your investments lose value.
The Women & Money podcast host fears people will make dire mistakes out of panic in a shaky market, with predictions of a recession.
“I know that your tendencies right here and right now are to start selling everything,” Orman says in a recent podcast. “Just not being invested in the stock market anymore. You’ve had it. You can’t take it anymore and you’re out.”
It’s understandable that people are fearful. Some economists and market analysts say we’re headed for a recession, doubting federal monetary regulators’ ability to raise interest rates at just the right amount to cool inflation without crashing the economy. In fact, Deutsche Bank recently announced it believes a mild recession could happen soon thanks to rising interest rates.
Instead of panicking, Orman says it’s time to take these actions to prepare and avoid hasty mistakes.
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1. “You need to start stockpiling now.”
The first mistake people make during a recession is continuing to spend as normal, Orman says. But on top of that, the pandemic has made a situation where Americans want to get out and spend with restrictions relaxed.
Cutting spending now is Orman’s top tip if you’re worried about a recession, she said in an interview in People magazine last month. Only buy necessary items and put the rest aside to save.
“Think of it as an economic pandemic, where you don’t spend, you don’t go out, unless you have the money to do so,” she said.
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2. “You need an emergency savings fund.”
Once you’ve cut spending, another common misstep is not putting aside money into an emergency fund. We learned yet again during the pandemic why emergency funds are a necessity when many people lost…