Why Market Crashes Make You Rich

When the stock market crashes, all hell breaks loose.

The media report on those who lost their fortunes and everyone suddenly becomes negative.

However, crashes are the best times for investors, it allows you to buy low and make a fortune in the future.

The idea of dollar cost averaging and investing monthly makes you do this, so leave your direct debit to carry on buying index funds, and wait.

The market went down 38.9% in 2009. It's hard for anyone to keep their cool when that happens.

The next year saw a 23.45% increase, and within a few years those that stuck with the investment were in the green and profiting greatly once more.

DON'T PANIC.

The idea behind this investment strategy is that in the long-term you profit.

When you buy a stock at 120 and it's now 100, you HAVEN'T lost 20. If you sell you have.

If you bought bitcoin when it was`120 and it hit 100 shortly after, you wouldn't have lost 20, you would have held it and sold at 3000 maybe.

Now all of a sudden it's a great deal.

Perspective is everything, and everyone has a pessimistic perception when the going gets tough.

They quit from their positions in an attempt to cut their losses, and buy in when the market looks better.

However, when the market looks better they've missed out on most of the gain.

This is why while the top 500 companies in the US in the S&P 500 historically average a 10% yield, investors only manage to get a 3% yield in the same exchange.

Don't try to play the market, the market will play for you.

The richest of men buy during crashes, it's brilliant. EVERYTHING is on sale, stocks, property, businesses.

This is why it's at the times where others are scared that we should be greedy.

It's the same principal for houses and other items with real value that have a general upwards trend.

When others are concerned about cutting their losses, it's the best time to jump at the opportunity.

For example, when the housing market crashed in 2008, properties could be bought for sometimes half the price of the previous years should you find the right deal.

If you were to sell that same house now, most properties are at that same 2007 peak level.

After a crash, the market always recovers. And that's what you have to keep in mind when investing. It recently happened with the S&P 500, the day after showed a large rise.

It's impossible to predict the crashes and booms perfectly however, hence my suggestion to invest monthly and forget about the money, this will always lead to great long-term returns.

This sounds rather simple, but while you see savings which you worked your ass off to earn, slowly depreciating into nothing, it's much harder to keep your cool.

However, if you can remain level-headed and not worry so much (as you won't be accessing that money any time soon), you'll gain a lot more.

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