The market is extremely fragile. Small news causes wild swings—this isn't normal or sustainable. Tech and AI stocks are overvalued, and we could see a flash crash in 2025-2026 lasting weeks or months.
But here's the key: Don't panic and go all cash. History proves that more people lose money trying to avoid crashes than those who stay invested and ride it out.
Find Your Scenario: Pick One and Act
Scenario 1: Five Years From Retirement
Your Goal: Protect what you have while still capturing growth.
What To Do:
Stay 90-100% invested in stocks using dollar-cost averaging
Hold back 10-15% of monthly contributions in high-yield savings (earning 3.5-4%)
This "dry powder" is for buying during the expected 15-20% dip
Your Portfolio:
50-60% S&P 500 (VOO, SPY, IVV)
25-30% SCHD (stable, dividend-paying companies)
15-20% QQQM (growth/tech exposure)
Why: When the dip comes, you'll have cash ready to buy stocks on sale—your biggest retirement boost.
Scenario 2: Already Retired
Your Goal: Don't lose money, but still fight inflation.
Critical First Step: Park 2-3 years of living expenses in high-yield savings/money market.
How to calculate:
Annual expenses: $80,000
Minus Social Security: $40,000
Gap: $40,000/year × 3 years = $120,000 in cash
Invest the Rest:
10% SGOV (short-term treasuries)
50% SCHD/VYM (dividend stocks)
25% VTI (broad market)
15% QQQM/SCHG (growth)
Why: The cash cushion means you never have to sell stocks at a loss during a crash. The portfolio provides income and growth.
Scenario 3: 20+ Years From Retirement
Your Goal: Maximum growth through compound interest.
First Priority: Pay off any debt over 6-7% interest BEFORE investing aggressively. A 22% credit card destroys even 15% stock returns.
Account Strategy:
75% in retirement accounts (Roth IRA, 401k)
25% in regular brokerage (for flexibility)
Your Portfolio (Equal Thirds):
33% SCHD (value/dividends)
33% S&P 500 or VTI (broad market)
33% Growth funds (SCHG, QQQM, VUG)
Optional: Small positions in VGT, SMH, or IBIT
Why: You have time to weather crashes. Balanced diversification beats chasing hot sectors (remember 2000 and 2008?).
Scenario 4: Just Got a Lump Sum (Inheritance/Windfall)
Your Goal: Invest without timing the market or psychological damage.
Don't: Sit on cash waiting for the "perfect" moment. That usually fails.
The Hybrid Approach (Best Option):
Invest 50% immediately at today's prices
Dollar-cost average the remaining 50% over 5-10 months
Example with $100,000:
Invest $50,000 today
Then invest $10,000/month for 5 months (or $5,000/month for 10 months)
Why: You get most benefits of immediate investing, but if the market drops right away, you're not devastated—and your monthly purchases buy at better prices.
What to invest in: Use the portfolio from whichever scenario matches your age/situation (1, 2, or 3).
Quick Reference: The Funds Mentioned
Stable/Value:
SCHD - Dividend-paying established companies
VYM - High dividend yield stocks
Broad Market:
VOO/SPY/IVV - S&P 500 (America's 500 largest companies)
VTI - Total US stock market
Growth:
QQQM - Top 100 NASDAQ companies (tech-heavy)
SCHG/VUG - Large-cap growth stocks
Safe:
SGOV - Short-term treasury bonds
The Bottom Line
Three core principles:
Match your strategy to your timeline - More time = more aggressive
Stay diversified - Don't put everything in one sector
Keep some cash ready - Buy when others panic
The hardest part isn't picking the right stocks—it's sticking with your plan when the market drops 20%.
Most people fail by either:
Panicking and selling at the bottom
Waiting for the "perfect time" that never comes
Chasing whatever performed best last year
Success comes from:
Starting now (not timing the market)
Investing regularly
Not panicking during downturns
Staying the course
Don't overthink it. Done is better than perfect.
TradeTheTimes | Daily Finance Newsletter
Disclaimer: Educational purposes only. Not personalized financial advice. Consult a licensed advisor for your specific situation.