Traders work on the bottom of the New York Stock Exchange (NYSE) in New York City.
Spencer Platt | Getty pictures
Börsenkorrectures are common
First, there are some consolation for investors. Although they feel painful, stock exchange corrections are quite common.
Since November 1974 there have been 27 market corrections, including the market step last week, according to Mark Riepe, head of the Schwab Center for Financial Research. This corresponds to an average of about every two years.
Most of them did not put anything more scary. According to Riepe, only six of these corrections became “bear markets” (1980, 1987, 2000, 2007, 2020 and 2022). A bear market is a downturn of 20% or more.
Return can be an “incredible opportunity”
Investors often do catastrophic thinking when it is withdrawing a market that believes that the market will never recover and that they will lose all their hard -earned money, said Brad Klonz, a certified financial planner and behavioral financing expert.
In reality, it is a less risky time to invest, compared to the time when stocks of all time are high and feel “more exciting”, said Klontz, Managing Director of YMW advisors in Boulder, Colorado, and member of the CNBC advisory board.
Investors also buy shares with a discount that is known as the “purchase of the dips”.
“It is an incredible opportunity for you to bring in more money,” said Klonz.
This applies in particular to young investors who have decades for share prices to recover and grow, said Klontz.
Investors in workplace plans such as 401 (K) plans absolutely use the equity sales via the average payment of the dollar costs. A piece of her salary checks goes into the market in every salary cycle, regardless of what is happening on the market, Klonz said.
Pay attention to stock/bond assignments
However, investors should think carefully before going on a stock exchange, said Christine Benz, director of personal financial and old-age provision planning for Morningstar.
You should generally avoid diverge from your inventory/bond assignments in a well-born financial plan, she said.
Of course, certain investors can possibly have sold out with cash by investing in undervalued shares, said Benz. According to Morningstar, for example, they sold on Wednesday with a discount of around 5% discount compared to their fair market value.
“I would have the goal of the asset allocation goal to determine whether this is an appropriate strategy,” said Benz.