One of the questions we get here at Stash when the market goes down is, “Should I sell?”
Here’s my perspective, which I’ve formed over the last 20 years and the answer is NO.
Selling is often the wrong thing to do.
The U.S. economy is strong and for that reason interest rates may rise which the markets don’t like. This has been triggered by rising bond prices and fear of inflation. Think of an angry three-year old. He or she eventually gets over it.
If you really are concerned about your risk, check out the Stash Coach to get more diversified and buy more of your mix. You can also consider Park My Cash and Uncle Sam, both hold purely U.S. Government bonds and no stocks.
Having these investments in your portfolio can help you experience a smoother ride over time with your investments.
Staying the course
Will the market go up and down? YES. The market will go up and down, and sometimes it will trade sideways. Right now the markets are facing some fear around interest rate hikes, and pulling back slightly from all time highs.
Consider market fluctuations as opportunities to continue adding to your portfolio at lower prices
Long-term investors shouldn’t be concerned with timing the market. I’ve said this before and I’ll keep saying it — no one can predict exactly what the market will do tomorrow or next week.
No matter what the market does, continue to buy small amounts of your investments on a regular basis. This is called dollar-cost averaging and it’s really important. The reason you can transfer amounts as little as $5 is so you can consistently buy small amounts of your investments.
Consider market fluctuations as opportunities to continue adding to your portfolio at lower prices. If the market keeps dropping, keep adding those little amounts. If the market goes up, keep adding those little amounts.
History shows us
The past 15 years have been turbulent and the charts below reflect how the market responded.
You’ll see gains and declines through the dot com bust, 9/11, the Great Recession, wars in Iraq and Afghanistan, and three separate presidential administrations. You’ll see how staying the course proved to be the way to go.
*Disclaimer: This graph is not a prediction or projection of performance of an investment or investment strategy. Source: Macrotrends (2018)
Imagine if you had bought small amounts of these investments yourself all through these ups and downs. You would have harnessed the gains from when the market was up, and bought more when the market was down.
No one could have predicted these past events. And no one can predict the future. Investing consistently over time is a strategy you can use for the long-term.
We are your investment adviser and our interest is in looking out for you and your interests by helping you continue to save and invest for your future. Although we can’t predict the future, try not to sweat the ups and downs.
Focus on the long-term and turn on Auto-Stash to make sure you keep investing through every market cycle.
It’s all about the time you are in the market that counts, not how you time it.
CEO – Stash
PS: Remember the Stash Way. Buy and hold, don’t sweat the daily ups and downs, and keep adding to your Stash on a regular basis.
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Additional Disclosure: Investment performance charts by Google, Yahoo, MSN Money are hypothetical and are provided for information purposes only. Such content is not a guarantee of future performance and is subject to certain risks, uncertainties, and assumptions that are difficult to predict. Example is a hypothetical illustration of mathematical principles, and is not a prediction or projection of performance of an investment or investment strategy.