Avoid This Major Mistake During a Market Crash (If You Are a Normal Investor)

A stock market crash feels uncomfortable because it suddenly calls many things into question: the value of your investments, your long-term plans, and sometimes even... your sanity. Seeing your portfolio shrink rapidly can be terrifying, triggering a wave of emotional responses.

Panic and euphoria drive much of the market’s volatility, but savvy investors can use these emotional swings to their advantage. By understanding the psychological forces at play, you can make rational decisions even when the market seems to be collapsing.

What Should Investors Avoid During Periods of Market Correction? Don't Sell.

That's right. Don't Sell! When there is a grand sale in stores, people rush to buy, but in the stock market, they often run away. This is a critical mistake that can devastate your long-term financial goals.

While market corrections and crashes are a normal part of investing, how you handle them can have a massive impact on your long-term results. With that in mind, here's the biggest error to dodge:

Mistake No. 1: Panic-Selling Your Investments

If you're worried that stock prices will plummet, it may be tempting to sell all your investments now to get out ahead of a potential further decline. This is a reaction driven by fear, not logic. It's often the worst possible decision you can make.

Selling during a crash essentially locks in your losses. You're selling low, and you'll need to buy back in higher later to recover. This significantly hinders your ability to build wealth over time. Remember, market downturns are often followed by periods of recovery. Staying invested allows you to benefit from the rebound.