Those who don’t invest in the stock market would like to pretend stock market crashes don’t concern them, but the truth is that they do. It’s not only those who actively trade who lose money. The average person loses money and opportunities as well. To show how, 24/7 Wall St. put together a list of eight ways market collapses affect people’s lives.
In the last stock market crash, between the spring of 2008 and the spring of 2009, the Dow dropped by more than half of its value. The crash ruined individual retirement accounts, pension funds, corporate balance sheets, as well as the overall confidence of companies and individuals. It also led to the question of whether the recession caused the market drop, or the market drop caused the recession as so many trillions of dollars of wealth were destroyed in the sell-off.
The markets have become choppy again, and their overall direction has been down in the past month — sharply down in some days. Many investors have already fled the market for the safety of gold, Treasuries, or AAA-rated corporate bonds. That trend has put a huge portion of the institutional and individual investor communities on the sidelines. A market sell-off always leaves people wanting to know if they should flee the market to avoid future drops, or remain in the market in the hope that it recovers.
24/7 Wall St has put together a list of the major effects a market sell-off has on personal finances. The current drop is fairly similar to the last one, insofar as the economy is weakening quickly, joblessness has become a problem again, and most corporate spending has ground to a halt. The dual anchors of a possible new recession and extended drop in equities will have an unpleasant effect on many people’s lives.
These are the eight ways the market collapse will drain your bank account.