Financial Moves to Make During a Bear Market

Depending on your goals, you’ll want to save and bootstrap as much cash as you can if your goal is to purchase a home or investment/rental property. If you want to invest into more liquid markets, you’ll want to directly allocate investments from your paycheck (whether that be dollar cost averaging or stock specific investing is totally up to you).

What Mistakes to People Tend to Make with Their Income During a Bear Market?

I think most investor mistakes are usually emotionally based at the end of the day. Try your best to not get too attached or detached to any one thing or any one idea and be open to new opportunities and ways of thinking. However, during a bear market many consumers wait too long to pull the trigger and execute their ideas. They typically want to too long or wait too little and their ideas aren’t fully executed when things don’t go to plan and their forced to adapt.

What Are the Smartest Ways to Allocate Your Paycheck When the Market is down?

It depends on your investment horizon and goals! If you want to play it safe, dollar cost average the S&P. If you’re goal is high-risk/high-return and you want try and beat the market –try stock specific investing with a mix of cryptocurrencies, etc. The further you stray from dollar cost investing into the S&P 500 with increments the riskier your strategy will be.

What’s the Best Way to Manage Emergency Savings During a Bear Market or Recession?

Ideally, any emergency savings you have should live outside your paycheck and should be used as a cushion so that you’ll be able to handle and unexpected expenses that life throws your way. Regardless of your investment strategies and how your paycheck is managed, this is the safest way to go about doing this. However, if you have a liquid investment portfolio that you manage and don’t mind liquidating in order to raise capital for unexpected expenses, you can use those assets as well. But just know that doing this could potentially hurt your investment returns over the long term and could eat into your investment gains.

Maximizing Dollars Invested and Company Matches to a 401k During a Bear Market

Whenever feasible, you’ll want to maximize the amount of dollars you invest during a bear market. The same goes for maximizing a company match into your 401k. The reason being, every single dollar you invest during a bear market or recessionary period is going to be worth much more than the same dollar invested during periods of expansion.

How Do Rising Inflation and Market Volatility Together Impact Paycheck Planning?

Inflation and market volatility can impact how much you can reasonably save without getting in over your head and how much to allocate towards favorable market action. You should aim to do everything in moderation if possible because you can’t just save all your money hoping for a recession and remain uninvested and you can’t just assume another recession or bear market isn’t right around the corner. Ideally, you should hold cash for favorable conditions but also don’t forgot to leave everything on the sidelines so that you don’t completely miss market moves.

What Should People Avoid Doing with Their Paycheck During an Economic Downturn?

Avoid spending your paychecks on needless things and overconsuming. During an economic downturn money is more valuable than it is during a period of expansion. So prudent consumers will try to maximize the benefits of an economic downturn by investing into as much as possible and lowering spending whenever possible.

Are There Any Recommended Budgeting Methods to Utilize During a Bear Market?

Zero based budgeting is highly effective in fully utilizing your paycheck during an economic downturn. The reason being is that every excess dollar you have can be allocated towards investing at bear market prices. However, if you utilize this strategy, you need to make sure you account for inflationary pressures and have an emergency fund or financial cushion in place. Since this method leaves your budget at $0 it requires extra consideration with regards to financial cushions.

Advice for Younger Investors Living at Home

If you still live at home and have low expenses try your best to save as much as you can and put it into the market while costs are relatively low! This was a highly effective way for me to get my beak wet when I just started out and helped set my love for investing for years to come afterwards.

You should always look to diversify your investments and try to prioritize savings during an economic downturn. During periods of uncertainty, it’s vital that we prepare for economic changes and avoid getting caught into a rigid way of thinking about how to invest. Don’t make the mistake of getting caught up in the same pattern day in and day out. There are always new opportunities around the corner but try your best to not let the ones in front of your eyes pass you by either. It's not always an easy decision to decide between saving and investing, however it's a great position to be in and one to be thankful for.