3. When to buy:Assuming you are sitting in cash waiting for the crash to buy stocks. How would you be able to identify a crash? Even legendary investor Warren Buffet was unable to time the fall during the pandemic.
Figure Out Your Pain ThresholdIt can be hard to see your stock portfolio cut in half. During the housing crash, I was overweight in financial stocks. It was not easy to watch most of them drop by 50%, and some, like Lehman, even went bankrupt.
Define Your Time HorizonThe 100-year chart shows that in some instances, after a fall, stocks did not regain their original levels for 30 years. However, if you held on to your stocks and kept dollar-cost averaging, you would be handsomely rewarded.
Diversify With Other Assets
allocation involves balancing risks and rewards in your portfolio by investing in several different assets. The purpose of adding assets besides stocks is that when stocks are down, the other assets can help stabilize the portfolio.