Stock values have soared in the course of the pandemic, and right now, investing is a pretty expensive prospect. But the stock market bubble that’s formed has to burst eventually — and that could potentially happen sooner rather than later. Throw in the fact that the pandemic still isn’t over, and there’s good reason to gear up for a stock market crash in the near term. And if you’re worried about that idea, there’s one important move you need to make.
There are a few reasons why it pays to boost your cash reserves when you fear a market crash is coming. First, having more money on hand could put you in a position where you’re able to leave your portfolio alone when its value declines, thereby sparing you from actually locking in losses.
Say you need $5,000 for a home repair, and normally you’d cash out some investments to scrounge up the cash. Well, you don’t want to do that when stock values are down, so if you pad your savings account, you won’t have to liquidate investments at a loss.