If I’m Anticipating a Market Crash in 2024/2025, Where Do I Keep My Assets?

Next question is from Simi. It says, “If I’m anticipating a market crash in 2024 or 2025 and I have substantial assets, what is your advice for where I should keep my assets? Also, how much money and cash should I have if I am anticipating a crash?”

This one was a little spicy, got a lot of buzz words in here. I’ll let you give some meat on this, but let me just tell you something that cracks. Sit back and watch right now. No, no, no, but it’s one of those things.

In my neighborhood now, we’ve closed down swimming pools, and things like that, but there were so many barbecues and other things I went to this summer. Everybody, because what’s funny is 2023 turned out to be a positive year where the financial markets made over 20%, yep. But during the summer, and specifically that third quarter from June 30th through September 30th, everybody thought the wheels were falling off the wagon, yep.

And it just shows me how emotional us humans are, that greed and fear are truly connected to each other. They are twins that are pulling on us in all different directions. I had so many neighbors tell me, “Hey, are you a prepper? Are you hiding?” Because I just feel like things are going so bad, and the economy’s going to go off. If you’re making decisions financially off of your politics, off of your fear, you are making a mistake. That is, there are so many betrayals and blind spots built within your emotional side.

This is the superpower that I’m hoping as a financial mutant that you are developing a skill set of recognizing your own limitations because of that fear and greed and all these other things that color our decision-making process. I don’t make decisions that way, and I’ll let Bo give the CFA part of this, but this is exactly why we have asset allocation. Because if you get the asset allocation right in the structure, yes, you might not be getting 100% if you just buy the S&P 500 or the total market index, but you get a lot more peace of mind because your asset allocation is going to be good before things go bad, during things going bad or things going good and never going bad, or maybe being a lot better than you anticipated.

You don’t have to get caught up in all that caution tale. In our last presidential election, we had clients and we had friends who would call us and they say, “Hey, is the 2016, the 2016, 201, hey, if so and so wins, this will happen to the market.” And then we hang up that phone call, and the next person would call and say, “Hey, if so and so wins, this will happen to the market.” And they were the exact opposite, and both were absolutely 100% certain they knew exactly what the markets were going to do.

It’s so interesting. Every time someone knows that they know that they know what the market is going to do, I start to kind of put my hands up, and I just kind of start backing off because the market can very easily and very quickly make fools of us all. The beautiful part about the market is we don’t know what it’s going to do over the short term. Now, over the long term, we have a pretty consistent track record of which direction it moves, but in the short term, it’s a little frenetic. It’s kind of all over the place.

And so what I think is so freeing is whether the market goes up 20% in 2024 or whether the market goes down 20% in 2024, I do not have to change my financial strategy. You know why? Because I’m still in the accumulation phase. So I’m always going to be buying. If it’s going up, I’m going to keep buying. If it’s going down, I’m going to keep buying.

I have a fully funded emergency reserve, so I don’t have to worry about liquidity needs with my savings. And I have an asset allocation that matches my age, my risk tolerance, my financial circumstance. I don’t have to go from an 80-20 to a 20-80 and then figure out how to go back from a 20-80 to an 80-20. Do you know how liberating it is to get to look at your financial situation and say exactly what Brian said, “Hey, I’ve got a great plan that is great today, it was great yesterday, and it’s going to be great tomorrow, no matter what the market, economy, or world throws at me.”

I would encourage you, Simi, to reframe the way that you think about your financial life because if you are trying to time your entrance and your exit, I think that is a futile exercise that likely will not turn out incredibly well for you. Time in the market is more valuable than timing the market. And here’s something just to close it out, Simi: always be buying, baby. I mean, just here’s the thing, make the good habits easy and the bad habits hard. Create an automated wealth-building process that if you set up an automatic investment plan every month where you’re always be buying, you don’t have to waste the calories and the mental capacity trying to figure out what’s going on.

And then cut off the cable news. It’ll make you so much happier. I’m just telling you, peace of mind is sitting out there. Just don’t let all the negativity of the world get in there. Build a plan that is what you can control, and you’ll be so much better for it. For more information, check out our free resources.