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What investing during the worst crash of my lifetime taught me
AJ Neeme
March 16, 2025
What investing during the worst crash of my lifetime taught me
January 2020. I make my first investment. Getting my finances in order has been an uphill battle, but I finally did it.
I’ve also gotten over my emotional hurdles:
There’s no perfect time to start
I will lose money at some point
I’m comfortable with the idea of a market correction (10% drop) or even a bear market (20%).
I’m ready.
February 2020. COVID sends the stock market spiraling.
We’re down 32% in days. One of the biggest crashes in history.
The entire world is in lockdown. Mass layoffs are underway.
I was not ready for THIS.
We’re living through a similar time.There’s no 1 event triggering the climate of pessimism about the global economy and the stock market but, we’re all asking:
How bad is it going to get ? How long will it last ?
The cold hard truth is no one knows.
Living through the 2020 crash and then the 2022-2023 market downturns, taught me 3 things about my investing profile I plan on applying going forward:
1.My perfect combo: a routine + some freedom
My main investing strategy is Dollar Cost Averaging. This means investing a set amount every month no matter what’s happening (Routine).
But, I also have cash on hand (my “potential investment fund”) which I use when I see a really good opportunity (Freedom).
When the market crashed in 2020, I invested an extra amount from this fund.
This strategy works for me, emotionally. I think it’s because:
It gives me a sense of control
I enjoy the sense of achievement when I buy while the market is dropping.
It’s an excuse to have a bit more cash on hand which makes me feel safe
The truth is, in the long term, I’d probably be better off with just Dollar Cost Averaging everything. But, I’ve been able to stick to this strategy for 5 years and 2 major drawdowns (2020 and 2022-2023)
+the amount I’m investing on a monthly basis is “enough” to give me a good retirement sum even if my “periodic investments” don’t perform as well.
2.I need a LOT more cash than 3 months to sleep soundly at night.
Pre-2020 crash, I believed having more than 3 months worth of cash is a waste.
Maybe 6 months if you have kids but now ? No, I need to be as invested as possible.
I have a very high risk tolerance.
Then the crash came. I found out, I don’t, in fact, have a very high risk tolerance.
When it became clear this won’t be a “2 weeks to flatten the curve” thing, stress started to build up:
What if I get laid off ? How long will it take me to get a job in this climate ?
What if an unexpected expense comes along or my family needs help ?
I stressed about every piece of news and checked my portfolio on a daily basis.
This wasn’t sustainable behavior and it came down to:
not having a large enough emergency fund
Investing more than I was comfortable with
I had to correct course.
I started investing less on a monthly basis until I built up my emergency fund to 6 months (by that time things started to stabilize and I wasn’t as worried about layoffs).
You live and you learn.
I currently sit at 12 months worth.
3.I’m still optimistic about the future.
I only invest in things I’m optimistic about, long term.
It’s not the only factor that plays into an investment decision; but it’s by far my main one.
In both market drawdowns, as scary as double digit drops are, I still felt “Long term, it’s going to be ok” and that helps me stay the course.
TLDR:
Market drawdowns are stressful and inevitable. They are also “the great validator”.
They reveal what strategies really work for us, and what emotional barriers we need to overcome. They showed me I need a larger safety net, a combination of routine and flexibility in my investment approach, and a belief in long-term growth.
It's through these challenges that we learn the most valuable lessons, solidifying our path to financial resilience.
Surviving a stressful market is about having a financial foundation strong enough to handle it.
That means an emergency fund, smart spending, and prioritization.
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1 Year in Emergency cash saved
6 Figures invested
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The information contained in this newsletter is for general informational purposes only. It should not be construed as financial or investment advice. Please consult a qualified financial advisor before making any investment decisions.