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Most Americans Don't Feel Protected From Stock Market Crashes. Here's How to Change That.

Will the stock market crash again this year? How about in 2021? These are questions on a lot of people's minds, and without a crystal ball, there's no clear answer.

One thing that is certain, however, is that all of us should be prepared for a stock market crash at all times. Yet in a recent TIAA survey, only 39% of Americans consider their investments to be well-protected from stock market volatility. If you're concerned about your ability to weather a stock market storm, here are a few moves to make immediately.

Image source: Getty Images.

1. Make sure your assets are allocated appropriately for your age

A stock market crash may not hurt you all that much if you're years away from retirement and have time to ride it out before you touch your portfolio. On the other hand, if you're a few years away from leaving the workforce, at which point you'll need your investments to live on, then a stock market crash could be downright devastating.

That's why it's so important to have the right age-based asset allocation. When you're younger, it could mean loading up on stocks and keeping just a small portion of your portfolio in bonds, which are less likely to lose value quickly. But if you're older, you'll want a heavier concentration in bonds and less money in stocks to protect yourself in case the market crashes right when you're on the cusp of retirement, or during it.

2. Have a diverse investment mix

Loading up on stocks from a single market sector could put you in a position to face serious losses if that particular segment gets crushed. As a general rule, it's wise to hold at least a dozen different stocks in your portfolio, but those stocks shouldn't all be similar. It's OK to own three or four tech stocks, but then you'll potentially want a couple of energy stocks, healthcare stocks, bank stocks, and auto stocks to accompany them.

Of course, these are just a few examples. You may be opposed to one of the industries just named, and that's fine. The key, however, is to assemble a diverse mix of stocks in your portfolio for better protection -- either by hand-picking individual companies or investing in index funds.

3. Have plenty of emergency cash at the ready

Even if you do a good job of allocating your assets and filling your portfolio with a wide range of stocks from different market sectors, you may still find yourself staring at on-screen or on-paper losses when a downturn strikes. A big part of protecting yourself, however, is to amass a solid emergency fund. If you sock away enough money in the bank to cover a good six months of living expenses, you'll put yourself in a solid position to leave your investments alone should a period of rockiness hit. And that, in turn, could be your ticket to avoiding permanent losses that are difficult to recover from.

A stock market crash can happen when you least expect it to. Make the above moves, and the next prolonged downturn won't need to be a period of stress in your life.

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