What you need to know in a down market.
It seems like every day there is something in the headlines telling us it's a bad day to invest. The cycle of market emotions can make it difficult to remember what to do and when. Don't let your emotions cost you money!
Let this be your reminder, invest with your head and not the headlines.
The cycle of seeing the market fluctuate can make it difficult to know what to do and when. Let's look at a story of five investors and the impact of their choices in a down market.
The story below shows the long term impact of how you choose to invest in a bear market. (A bear market is a decline of 20% or more from recent highs).
In this story each of the five investors invested $10,000 in the stock market in August 2000 and kept their investments through the market crash in September 2001. Each investor had $6,951 by the end of September, from that point each of them made different choices over the next 20 years.
Investor One: pulled their investment out of the market after the market crash and put it under the mattress. Ending balance: $6,951
Investor Two: pulled their investment out of the market after the market crash and put it in a low interest money market. Ending balance: $8,812
Investor Three: kept their investment in the market after the crash, but didn't contribute anything to the account. Ending balance: $31,142
Investor Four: pulled their investment out of the market after the crash, put it in a low interest money market & contributed $500 monthly. Ending balance: $128,881
Investor Five: kept their investment in the market after the crash & contributed $500 monthly. Ending balance: $345,296
Click here to look at a visual showing the financial impact of their choices.
Each investor reacted differently to the down market, which outcome would you want?
Keep in mind your age, income, employment status and other savings are a few of the important factors to determine what choices are best for you.
If you want to know what to do in a down market send me an email to get your personalized plan for building wealth.
