How do investments protect cash in a stock market crash?

As an investor, you want to protect your principal.

People keep asking similar questions in many ways – How do investors navigate cash now, in this market? As an investor, you want to protect your principal. However, what should you be doing now? Should you be parking money in cash? In my opinion, keeping cash on hand does not mean sticking it under your mattress.

Well, we are experiencing a very volatile market. A lot of fear and uncertainty drives people’s buying and selling behavior at the moment. The worst thing you can do is panic. Do not act based on panic. If you have not done so already, please read 6 Common Portfolio Protection Strategies

We recommend you consider the following :

1. Never try to time the market
Short term market moves will never get your investment goals achieved in the long run. As you know, there are a lot of planned and unplanned events which cause the market to react. Whether you are a short term or long-term investor, you should consider investing on a consistent basis to reach your financial goals.

2. Every crisis is different
What happened before may not happen this time. Some of you may remember what happened in 1987, 2001, 2008, and 2011, when specific events caused the market to go down very fast in a short period of time. Each of those crashes had its own reason. However, we have not faced this Coronavirus effect. As of now, we have no defense against this virus. The way it spreads to anyone and affects economies on a global scale is very different from other events that have happened in the past. As an investor, don’t overreact to the market volatility. Remember, there is always an opportunity cost to enter or exit any position.

3. Diversification is still the name of the game
The better chance you must diversify, the better chance you have of navigating the market. Consider Gold, Silver, VIX which is inverse of Bull Market asset, ETF, Liquid alternative etc. Commodity downtrends affect Stocks and Corporate Bond markets. The Corporate Bond market impacts lending and credit tightening, which leads to layoffs in commercial businesses. Ultimately, layoffs lead to Real Estate markets drop. Yes, Real Estate is not a safe investment in this market. You should consider diversifying assets you feel comfortable with for cash liquidity.

It is highly advisable for you to sit down with a professional financial advisor to learn about your risk level and short- and long-term investment goals. If this information helps, please join our community and pass it along to someone you care about. Knowledge should not restricted, let’s share and pass it on.

About us

Urban Food Alliance (UFA) is a nonprofit 501c organization based in principle on pure philanthropy. We have several goals in our mission, the ultimate of which is to uplift the less fortunate, help the needy, and “teach a man to fish” so to speak. Our activities involve holding free or heavily subsidized educational seminars on financial literacy, investing, and stock market basics. We have several chapters across the country where we are organizing these activities, and prioritize involving women, the socioeconomically disadvantaged, and minorities. We are also heavily involved in distribution of free meals to the needy and homeless, the hungry, and generally less fortunate, and have weekly drives where we connect to local restaurants with similar philanthropic goals, and provide fresh and hot meals to the community.