What if market crashes

While there is some data suggesting that a market downturn could be on the horizon , it's far from definitive. It's impossible to predict when a market crash will occur, how bad it will be, or how long it will last.

That said, with the market being rocky right now, should you sell your stocks just in case a crash is looming? Here's what you need to know. In theory, selling your stocks right before a market downturn is a smart strategy.

You'll be selling when prices are still high, then you can reinvest once prices are at rock bottom to make a hefty profit. In real life, however, this tactic is extremely difficult to pull off.

Market crashes are unpredictable, and successfully timing the market is nearly impossible. It's also easy to lose a lot of money if you time the market incorrectly. Say, for example, you believe a market crash is coming, so you sell all your stocks right now. The market may not crash, though, and stock prices could continue increasing. In that case, you've missed out on those potential earnings by selling. And because stock prices have increased, if you decide to reinvest, you'll end up paying more for your investments than what you sold them for.

In this scenario, you could simply keep your money out of the market indefinitely, since a downturn is bound to occur sooner or later. With that strategy, though, you could potentially miss out on even more earnings. Say you sold your stocks in March when the market took a nosedive, for example.

If you chose not to reinvest until the market crashed again, you would have missed out on one of the greatest bull markets in history. In the moment, though, it's impossible to know whether the market really is headed toward a crash or not. Rather than selling your stocks when the market is volatile , a better option is to hold your investments for the long term. Use up the food that you have in your pantry and freezer before you go out and buy more.

Focus on funding the Four Walls before anything else:. You can pause paying extra toward debt right now. When the tough time passes—and it will—then you can start back up and pay extra on your debt. Stay on the plan!

Stay plugged in and ride it out to give your investments more time to grow and recover. Focus on time in the market. When there are big shifts in the market, schedule a call with your investment professional. Ask your pro if you need to make any changes because of the crash.

Connect with an investment professional in your area. No matter what the rest of has in store, remind yourself of the things you know to be true. You care about your family, your dreams and your future—so make your investment decisions with those things in mind. Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since Millions of people have used our financial advice through 22 books including 12 national bestsellers published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Guided Plans. Trusted Pros. Free Tools. What Is a Stock Market Crash? Craft a harder-working money plan with a trusted financial pro. About the author Ramsey Solutions. More Articles From Ramsey Solutions. Thank you! Keep a running wish list of individual stocks you would like to own. One strategy to overcome the fear of bad timing is to dollar-cost average your way into the investment. Dollar-cost averaging smooths out your purchase price over time and puts your money to work when other investors are huddled on the sidelines — or headed for the exits.

Check out our best brokers for stock trading. But when times get tough, self-doubt and ill-advised tactics can take root. Even the most confident saver-investor can fall victim to harmful short-term thinking. Don't let self-doubt sabotage your financial plans.

Consider hiring a financial advisor to kick the tires on your portfolio and provide an independent perspective on your financial plan. We have a list of the best financial advisors. Thirty-two percent of Americans who were invested in the stock market during at least one of the last five financial downturns pulled some or all of their money out of the market. Even the Great Recession — a devastating downturn of historic proportions — posted a complete market recovery in just over five years.

Use our calculator to find out. Trust in asset allocation. Remember your appetite for risk. Know what you own — and why. Be ready to buy the dip. Get a second opinion. Focus on the long term. Show More. What is a stock market crash?