Another Q&A session with DW. Yay! Quite a few readers have asked me what I will do if the market crash. So, this is my plan (sort of). I better put a disclaimer right now. 

Disclaimer: The plan below is suitable and comfortable for myself. Some parts might suit you too. I am not a financial advisor or guru. Please evaluate your own financial situation and act cautiously.

Step 1: Prepare an Armageddon Fund
Prepare yourself. Save up an Armageddon Fund. This is the sum of money that you can use for investment when the markets crash (>50% drop). Do not confuse this money with the Emergency Fund. The money in the Emergency Fund should only be used for emergencies (retrenchment, surgery, accidents etc.) Personally, I have 3 months worth of salary as my emergency fund. 

I have an Investment-Linked Policy (ILP) maturing in September 2014. This …