I kept telling myself, “Don’t look at my investments. Don’t look at my investments. Don’t look at my investments. Don’t look at my investments. Don’t look at my investments...”
Dang. I looked at my investments.
You probably did the same. September was not a great month for the stock market, and like many others, your investments might be down because of it.
Take a deep breath. Before you freak out about the market and do something extreme, let me remind you of a few things:
1. Markets go up, and markets go down.
With a few exceptions, the market has been incredible over the past decade. In fact, it has done so well that some act as if investing in the stock market should provide a guaranteed, quick return. This is not the case. What we have experienced over the past decade is abnormal.
Markets do go up, but they also go down. The good news is that they go up more than they go down. When the market is up, overconfidence drives many to make unwise investment decisions. When the market is down, the problem becomes fear. Don’t be fearful and sell all your investments in your retirement accounts.
Remember, markets go up, but they also go down. This is normal.
When the market is up, overconfidence drives many to make unwise investment decisions. When the market is down, the problem becomes fear.
2. Down markets give you the opportunity to buy investments at a cheaper price.
Are your investments down? Yes. Can you purchase investments at a lower price when the market is down? Also, yes.
You have probably heard it said, “Buy low; sell high.” Well guess what? Down markets allow you buy low. Believe it or not, those who expect ups and downs in the market get excited when the market takes a dip. The down market allows them to buy mutual fund, ETFs, and index funds at a cheaper price. And you should as well.
But this requires a long-haul mindset.
3. Wise investing is long-haul investing.
Down markets stress out those who are engaged in short-term investing. But not for those who invest for the long-haul. Those with a long-haul mindset are not concerned about a down month or even year. They are thinking in terms of 10-year, 20-year, or 30-year investing. September is a blip on their timeline.
Long-haul investing is wise investing. It helps you avoid emotionally driven decisions, like selling everything when the market takes a dip.
So, adjust your investment allocation, if necessary, but don’t do anything extreme. Remember, markets go up, and markets go down. Down markets give you the opportunity to buy investments at a cheaper price. And wise investing is long-haul investing.
Don’t freak out.