Story: My First Taste of Market Crash

I’ll never forget my first real experience with a market crash. It was during the COVID-19 turmoil when investments across the board were tanking. My portfolio dropped by about -4% in a matter of weeks. I may not have been new to investing, and but like many beginners, I felt a pit in my stomach.

I wanted to keep investing, to take advantage of lower prices, but life had other plans. The process of buying a house — a huge, practical financial commitment — which meant my cash was tied up. I couldn’t continue my regular investments as I wanted. Looking back, yes, I regret not contributing more to the market during that dip. But do I regret buying a house? Not for a second. It was the right practical choice at the right time.

This experience taught me an invaluable lesson: the first market crash is as much about mindset as it is about money. How you react early on can define your investing habits and your long-term wealth trajectory.

Why This Matters

Market crashes are inevitable. They are part of the investing journey, not the exception. But for beginners, a crash can feel like the world is ending. The problem is that many new investors make two costly mistakes:

1. Withdrawing investments during a dip.
2. Stopping contributions altogether.

Both actions can severely limit long-term wealth creation. Market recoveries tend to happen faster than most people expect, and the gains missed by sitting on the sidelines can be significant. Your first market crash is a chance to build discipline, learn emotional resilience, and reinforce a habit that will serve you for decades: staying invested.

Pitfall 1: Withdrawing Investments Too Early

One of the biggest mistakes beginners make is panicking and selling during a market dip. This is called crystallising losses — locking in a loss that could have otherwise reversed.

Think of it like selling wood for a fireplace in the middle of summer. Sure, people might buy it, but they’re not paying the premium they would in winter when the demand is high. In investing terms, selling during a crash ensures you miss the upswing that inevitably follows.

The key is to stay calm. Don’t make rash decisions based on fear. Remember, markets have a history of recovering over time. Selling during your first crash often causes more harm than good.

Pitfall 2: Stopping Contributions

The second major pitfall is halting contributions. Many beginners assume that by stopping, they’re “protecting” themselves. The truth? By pausing investments, you’re missing an opportunity to buy at lower prices — essentially, a market sale.

This is where dollar-cost averaging comes into play. By contributing regularly, you automatically buy more shares when prices are low and fewer when they’re high. Over time, this strategy smooths out market volatility and reduces the stress of trying to “time the market.”

The message here is simple: keep going. Consistent, automated investing beats trying to predict market peaks and troughs.

Creating Your Investment Playbook

For beginners, a structured plan or playbook can prevent emotional decisions. Here’s how to create one:

1. Set a minimum investment horizon. Aim for at least five years. This allows time for market fluctuations to smooth out and gives you space to learn without panic.
2. Decide your contribution level. Stick to what feels comfortable, not what you think you should do based on fear or hype.
3. Define why you are investing. Make sure that why you are investing is important to you, make it real and its importance will help keep you calm during crashes.

Creating a playbook isn’t just about rules; it’s about cultivating the mindset to weather your first crash and stay focused on long-term growth.

My Financial Playbook: An Example for Beginners

When I first started investing, I realised that having a clear, repeatable plan was essential to staying calm during my first market crash. Here’s how my financial playbook looks — a model you can adapt to your own situation:

• Investment Vehicles: I focus on a mix of index funds and target-date funds. This combination gives me exposure to growth stocks while still including some bond allocation for stability. My split is roughly 50:50, balancing growth potential with some downside protection.
• Regular Contributions: I invest 10% of my net income automatically every month. On top of that, any leftover money at the end of the month, I invest 80% of it. Automating contributions removes the temptation to pause during market dips.
• Time Horizon: My minimum horizon is five years, but my ultimate goal is closer to 15 years. Thinking long-term helps me ignore short-term market noise and stay consistent.
• Emergency Fund: I keep three months’ living expenses set aside, which gives me peace of mind during volatility. My job is stable, so I don’t feel the need to liquidate investments when markets fall.
• Consistent Strategy During Crashes: During market dips, I stick to the plan. I don’t overreact or try to time the market — consistency is far more powerful than guesswork.
• Goals: Right now, I’m focused on climbing to 100K, after which I’ll aim for the next 100K. Each milestone is part of a larger, long-term vision.
• Mindset Rules: Keep it simple. Enjoy today. Don’t obsess over daily market swings. The less you react to fear, the more you benefit from compounding over time.

This playbook isn’t about perfection — it’s about having a clear, repeatable strategy that keeps you calm, consistent, and moving toward your financial milestones.

Staying Calm Amidst Market Noise

Fear is contagious. Sensational headlines and “doom and gloom” news can push beginners into panic mode. Here are strategies to keep your head clear:

• Uninstall sensational news apps that thrive on fear-based engagement.
• Unsubscribe from alarmist investment emails that cause stress rather than provide value.
• Avoid portfolio comparisons. Everyone’s financial journey is unique.
• Focus on your emergency fund. Knowing you have cash for short-term needs reduces the temptation to sell in a panic.

By controlling what you can — your mindset, your routine, your reaction to news — you reduce emotional investing and stay consistent even when the market shakes.

Lessons Learned: Practical Regrets vs. Mistakes

Not all missed opportunities are mistakes. My COVID-19 example illustrates this perfectly: I couldn’t invest as much as I wanted because of a practical financial commitment — buying a house. That wasn’t a mistake. The regret comes from abandoning a plan, not from making a sensible, unavoidable choice.

Focus on what you can control. Celebrate the decisions you made right, and use your first market crash as a teacher, not a source of regret. Over time, these lessons compound into stronger financial discipline and real wealth.

Questions for You

• Are you stopping contributions when the market dips? Why?
• Do you have a minimum time horizon for your investments?
• Have you automated your investing to avoid emotional decisions?
• How do you separate news panic from real opportunities?
• When was the last time you viewed a market dip as a “sale”?