Please read strategies and preparation for stock market crash to understand this post better.
One of The Best Ways to be Well Prepared For Stock Market Crash Is To Diversify
I offer a course in which all instruments of investments opportunities in India are written. It covers all like stocks, mutual funds, even government securities investments and allocations of where to invest what. You can read about the invest well course here.
This will help you a lot to decide how not to keep all eggs in one basket and the best places to invest your hard earned money. With the help of the course you will be able to chose the best stocks, mutual funds and other opportunities to invest. If your money is well diversified, one stock market crash will not make you poor.
Another Way To Be Prepare For Stock Market Crash Is To Invest Geographically
Geographically also you can invest in many countries, but it is way too complicated to decide in which country to invest and where to invest etc. There are mutual funds in India that invest in many countries, but I have found that Indian mutual funds investing in India over a long period of time perform better than foreign country investing mutual funds, so its better you stick to mutual funds investing in Indian companies. How to chose the best mutual funds is written in the invest well to retire with crores course.
Keeping some cash handy is also a good idea
As soon as markets crash, just get in when everyone is selling. There will be huge liquidity for buyers.
During a crash, whatever the buyers bid for, the sellers accept and reduce their ask price.
When the markets are going up, “ask” is stronger than the “bid” prices.
When the markets are going down, “bid” is stronger than the “ask” prices.
Stock Market Crash Is A Great Opportunity To Save Taxes
Exit from not so good stocks from you portfolio and take a short term loss that can be carried forward for 8 years and enter a better looking stock. You then save your taxes and also get a better return over the long term.
Carry Forward of Short Term and Long Term Losses
You may not be able to take benefit of your entire short term or long term loss in the same year. In that case you may show your short and long term loss in capital loss section and carry it forward for next 8 assessment years immediately following the assessment year in which the loss was first computed.
During a Bad Stock Market Crash Patience is Important
Total crash time of the 2008-09 crash was almost 17 months. But see after than the recovery was less than 12 months. Within 12 months stock markets were back to what they were in January 2008.
Read the example of HDFC Bank return given in hedge is the best way to avoid huge losses in a stock market crash.
You will know why buying during a crash is very important. But it is very important to chose a good stock to buy. You do this course to know how to chose a good stock to buy.
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You can read about me here and my trading mistakes here.
Dilip Shaw, Founder
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