What to do when the S&P 500 crashes | Should you sell or continue with the new NISA?

【summary】

When the S&P 500 crashes, the first thing you should do is not sell.

Check your living expenses, investment objectives, amount of savings, and the contents of your holdings.

Situation	Response
Living expenses are separate	Consider continuing savings
Investing money that will be used soon	Considering selling or reducing the amount
Unable to withstand decline	Lower reserve amount
Concerns about concentration in the US	Considering balance with global stocks

The new NISA is a system for long-term investment.

If you rush to sell during a market crash, it will be difficult to take advantage of the benefits of long-term investment using the tax-free allowance.

S&P500 crashes

The S&P500 is an index that represents large-cap stocks in the United States, but it is not always on the rise.

There have been many major downturns, such as the bursting of the IT bubble, the Lehman shock, and the coronavirus shock.

What happens during a crash	Contents
Appraisal value decreases	Unrealized loss
News fuels anxiety	Makes me want to sell
Pessimism increases on SNS	Policy wavers
Makes you want to stop saving	Can't buy when it's cheap

A crash is not an abnormal situation, but prepare for it as something that happens when investing in stocks.

Things to check before selling

Before selling, check the following four things:

Confirmation	Contents
Purpose	Retirement funds or short-term funds
Period	Money that will not be used for more than 10 years
Lifestyle defense funds	Do you have enough cash
Reserve amount	Is your household finances reasonable

If you are investing with long-term funds, there is no need to sell just because of a market crash.

On the other hand, if you have money that will be used within a few years, it's a good idea to put too much money into the S&P 500.

Advantages of continuing to save

If you keep saving during a market crash, you may be able to buy at a lower price.

Benefits of continuation	Contents
You can buy cheaply	You can buy many units
Habits remain	Hard to be swayed by the market
Get into the recovery phase	It's hard to go back if you sell

However, there is no need to force yourself to continue.

If you are struggling with living expenses, another option is to continue with a lower savings amount.

Cases in which you may consider selling

Even during a market crash, there are times when you may want to consider selling.

Case	Reason
It was money I would use soon	I was taking too much risk
I don't have the funds to protect my life	Protecting my family's finances comes first
Concentration in the U.S. is not appropriate	Review investment policy
It was a high-cost product	Review to a low-cost product

When selling, consider steps such as stopping savings, reducing the amount, and selling some of the assets, rather than all at once.

summary

When the S&P 500 crashes, whether you should sell immediately or not depends on your investment objectives and when you will use your funds.

If you have surplus funds that will not be used for 10 years or more, you can consider continuing to accumulate funds.

If you have invested money for living expenses or money that will be used soon, you need to reduce the amount invested, increase cash, or reconsider diversification.

The most important thing in the event of a market crash is not to predict market prices, but to create a household budget that allows you to avoid having to sell.

Reference

This article is for educational and informational purposes only, based on public information. It is not a recommendation or solicitation to buy or sell any specific security or financial product. Although care is taken with accuracy, the content and future investment outcomes are not guaranteed. Final investment decisions should be made at your own judgment and responsibility.