Stocks are down and everything else seems falling apart. If you’re lucky to have a job and a bit of money stashed away, then be sure to do things the smart way especially in this time of uncertainty. Here are three important moves for you to take if you haven’t already done so.
Build up your emergency fund. This can’t be stressed enough. If your current emergency fund is just for 6 months worth of living expenses (the former standard emergency fund amount), try to gun for something that would sustain you longer say, a year, minimum. No one knows the length of the crunch and it’s always better to reinforce your cover once another round of job cut barrage hits. Favor this over your other expenses and investments for now. Better be safe than sorry.
Cut your losses quick. If you have invested in stocks then you should know that the Dow and S&P indexes are both at 12-year lows. You might not have to go as far as dumping everything to cut your losses short but reallocating your investments and diversifying your portfolio give you better chances once (if?) the market recovers. It’s always a gamble with stocks but if you don’t happen to have much spare funds for daily expenses, it might be better to be liquid these days.
Take care of your 401(k). Building up your emergency fund doesn’t mean that you have to plug other cash flows such as your 401(k) contributions. Don’t waste your chance to double your money if your employer matches your contributions. However, just be sure to contribute only to as much as your employer matches it.
