The term ‘bear market’ is not one that investors like to hear. It means that the market has fallen by 20% or more from a 52-week high. Prices can then start to fall further as investors become pessimistic about their investments.
While a bear market is undoubtedly less desirable than a bull market for seasoned investors, it can be a welcome opportunity for those trying to enter the investment world and accumulate wealth. If you’re trying to navigate an unfamiliar bear market for a desirable financial outcome, you might like to take some of the following steps:
- Invest in Sensible Assets
Property has long been considered a sensible asset for long-term gains. Grab the bear market by the horns and contact a commercial property management company to discuss your options.
While all investment types, real estate included, experience gains and losses, the property market tends to experience less volatility compared with stocks. Indeed, adding commercial property to your portfolio can be a great way to hedge against inflation.
- Diversify Your Portfolio
The “don’t put all your eggs in one basket” adage rings true during a bear market. If you have all your money invested in one stock or a single investment type, it can take a significant hit during a market fall.
You might not be able to avoid losing money in a bear market, but you can avoid losing all of it. Spread out your funds over several investment types, like real estate, stocks, and even precious metals, and you’ll be surprised at how easy it is to retain your wealth during troubling economic times.
- Be Careful with ‘Fashionable’ Investments
The bear market can seem like the right time to invest in some of the latest and greatest assets, like speculative stocks, cryptocurrencies, and NFTs. While the prices might be right, it doesn’t change their volatility.
There’s nothing wrong with taking a calculated risk on something you’ve heard great things about, but don’t put all your money into something because it’s new, “set to succeed,” and affordable to buy.
If you’re eager to get involved in a new investment type, perform thorough research. This means reading beyond the hype posts and white papers. Doing so will ensure you have all the facts and are able to make a decision with confidence.
- Get the Experts Involved
Whether you’re a seasoned investor or new to the investment world, the bear market can be challenging to navigate. It’s full of unknowns, and it’s easy to get anxious as you watch the value of your investments drop. You may find yourself worrying that you’re destined for failure, but it’s crucial to avoid making hasty decisions during uncertain times.
Before you do anything rash, talk to experts whose job it is to follow trends, calculate risks, and understand the market. Their expertise and advice can guide you away from panic by ensuring you’ve considered all risks and rewards.
- Pay Down Your Debts
Not only can stock and real estate prices be affected during a bear market, but so can interest rates. The higher interest rates rise, the more unmanageable debts can become. If you have any high-interest loans, consider taking care of these before making any further investments. Otherwise, you might find yourself in a stressful financial situation.
Bear markets might be bad news for seasoned investors, but they can be a stepping stone into the investment world for those who have been waiting for the right time. Take note of the tips above, and you’ll be on your way to making sound investments that set you up for future success.
