What do you do when the market has more stomach-churning dips than a roller coaster? Like now!
Obey the rule of the roller coaster: You only get hurt when you jump off. Same with the market. You only lose money when you sell.
So what do you do when the market plunges? Follow the sage advice from investment firm, Ellevest, in their newsletter What the Elle.
As Sylvia Kwan, Ellevest’s Chief Investment Officer, explains: “Over the past 93 years, the stock market has gone up by an average of nearly 10 percent a year. But it didn’t go straight up!”
Indeed, markets always do what markets do: bounce around wildly. Like now.
As I write, the market is in Correction territory, which means its fallen 10% from it’s high. Yeah, it may feel like the sky’s falling. Yeah, it may be tempting to make like Chicken Little and run for the hills. But consider this…
“If you had invested in the stock market from 1999 to 2018, and not touched it,” Sylvia explains, “your money would have tripled.” Even with the Dot Com Bubble and the Great Recession.
Had you jumped ship, however—even if you got back in when things calmed down– you would’ve missed the ten best days over that period. And guess what? You would’ve cut your gains in half. Just from missing 10 days.
But you want to do something, right? Ok, here’s what you CAN do.
- Make sure you’re diversified. “The best way to protect yourself against the unknown is a well-diversified investment portfolio, with a range of investments,” Sylvia points out.
- Be patient and think long term. According to Marketwatch: “There has literally never been a 20-year period in the past century or so that has resulted in a negative return for stocks.”
- Shift your perspective. It’s not a crash. It’s a sale! Prices are cheaper than they’ve been in a while.
- Turn off the TV. Shut down the computer. Don’t look at your portfolio. Ignore the naysayers. Instead, take a walk, get a massage, and remind yourself that the market will go back up. It always does.
What strategies do you have for keeping your head when all about you are losing theirs? Leave me a comment below.