How to Survive a Bear Market Over 50

Why is that bad for stocks? Bonds are loans to corporations, municipalities and the U.S. government. If investors can get a relatively good rate (after inflation) on a bond, they will tend

to move money out of stocks and into interest-bearing investments, such as government bonds. In addition, higher rates mean that businesses have to pay more for loans, which reduces

corporate earnings. GLOBAL TENSIONS. The world is an uncertain place, and sometimes events come out of the blue that cause a stock market sell-off. Exhibit A: The wide-ranging tariffs from

the Trump administration that were announced on April 2 rattled the world and sent stocks plunging, pushing the Nasdaq Composite into a bear market. And things could get worse as the

escalating trade war makes investors increasingly pessimistic about the U.S. economy's trajectory. History provides other examples. In October 1973, OPEC (the Organization of the

Petroleum Exporting Countries) declared an embargo on oil exports, causing the price of oil to triple in a few months. The price hike affected not only consumers, who had to wait in long

lines for gasoline, but also the many companies that relied on oil to make or ship their goods. The bear market that started in January 1973 lasted 69 months and clawed the S&P 500 for a

48.2 percent loss. More recently, the short, sharp bear market in 2020 was caused almost entirely by the onset of the COVID-19 pandemic. SOBRIETY. The stock market is a place for

optimists: You buy stocks because you think corporate profits will increase, the economy will be healthy and prices will rise. Every so often, however, stock investors get too optimistic,

making big bets on stocks that don’t deserve all that money.  In 2000, for example, investors made huge bets on online companies such as the now-defunct Pets.com. Eventually, investors

wised up and realized that those companies were never going to make money, and that started the big bear market of 2000. It’s entirely possible to have all three factors in play at once. In

2022, interest rates shot up, albeit from very low levels, as the Federal Reserve sought to rein in inflation. The Russian invasion of Ukraine not only made the world a less stable place but

also drove up the price of oil for several months. And there had been big moves in dubious stocks, such as video game retailer GameStop. WHAT TO DO WITH YOUR MONEY  Your reaction to a bear

market should depend on your current financial position as well as your goals.  For example, if you’re 50 years old and plan to retire in 15 years, your best bet may be to keep socking

away money in your 401(k) or IRA in the same proportions as you have been. The average bear recovers in three and a half years. In the meantime, if you invest regularly, you hope to be

buying stock at progressively lower prices. That’s a good thing: You want to buy low now and sell high later. If you’re retired, don’t take withdrawals from your stock funds in a bear market

unless you have no other choice. You won’t have income to cover your losses. And if your stock fund is down 15 percent and you withdraw 4 percent, your account will be down 19 percent.

Withdrawals in a bear market just make things worse. Instead, most financial planners recommend that you have a “bucket plan.” Consider putting your investments in three buckets: ultrasafe

cash investments, such as bank CDs and money market funds; moderate-risk investments, such as bond funds; and high-risk investments, such as stock funds. Use your cash investments for

making withdrawals in volatile markets. Your riskier funds will still get hammered, but you won’t make the situation worse by taking withdrawals that lock in the losses. When your stock

funds have recovered, you can replenish your cash and bond buckets — and be prepared for the next bear market. Now might also be a good time to consult a financial advisor to discuss

whether you should make any changes to your retirement accounts, investments and other assets. You can search a certified financial planner in your area on the Let's Make a Plan 

website.)