The past few years have taken their toll on the U.S. economy. Personal debt is out of control, foreclosures hit an all-time high, even cities have begun to file for bankruptcy protection The national debt has pushed our leaders into making some tough decisions to protect us from financial disaster. The global economy is suffering and the U.S. is carving out unfortunate historical events.
Now that our country has taken a hit to its credit standing for the first time in history, many economists and investors are left wondering what to do next. In times like these, many people question the safety of their investments and whether they should get out before further problems strike. However, backing out of a sinking stock market is not always a good strategy and could result in even bigger economic problems.
Watching Out For Your Money
Many Americans have a substantial portion of their money tied up in stocks, bonds mutual funds or money market accounts. All of these funds are exposed to some risk after a significant drop in the stock market yesterday. So what are economists and financial experts advising people to do with their money during these rough economic times?
The most important thing is to not panic. Although the risk of investing has increased, that does not necessarily mean that anyone holding an investment account should cash out. As consumer confidence decreases, many people begin to sell off stock, liquidate accounts and buy less risky commodities, such as gold. Economists warn that none of these measures are necessary and has the potential to perpetuate further economic decline. They suggest:
Conduct a risk assessment. Review your accounts and talk to a professional about the potential risk involved with your accounts. If you aren’t comfortable with a particular investment, find out the best way to lower your risk without making drastic changes.
Keep a “balanced portfolio“. This means that you should have some stocks or money market accounts, a little of your money in bonds and some in cash. Keeping a little of your money spread out in various investments can prevent major losses and help you ride out the coming waves of the market.
Be patient. The market dips and rises everyday, sometimes more than others. The nature of the market is inherently variable and after a dip, a rise will follow.
Stay positive. Consumer confidence does influence exert influence over the economy and maintaining some level of optimism can impact the economy in positive ways.