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Investors: Here’s How to Think Long-Term With Your Money

November 23, 2018

3 min read

Life comes one day at a time. And it’s easy to get caught up in your daily dramas, or chasing the dragon of immediate gratification without keeping the bigger picture in mind.

For example, you may feel the urge to eat an entire package of Oreos. But that type of behavior can be highly destructive over the long term, both for your health, and maybe for your dating prospects.

And the same goes for your finances. You may want to spend, spend, spend, but when you think years down the road, it’s clear that you should probably be considering a strategy fit for the long term.

It’s part of the Stash Way. Wait, what’s the Stash Way?

When thinking long-term, zoom out

As an investor, you’re probably focused on what’s happening with your money—possibly on a day-to-day basis. That means every hiccup in the market—including dips into correction territory—bring with them opportunities to panic.

And the market has bad days, and there are times when investors have to endure bear markets, or prolonged market declines. It happens. But what’s important to remember is that, historically, the markets have recovered.

If you look at the performance of the Dow Jones Industrial Average index over the past few decades, you’ll see that despite some downturns, the market trends upward over time:

Disclaimer: This is not a prediction or projection of performance of an investment or investment strategy. Past performance is not indicative of Future Performance.

An investor focused on the short-term may have sold during one of the downturns over the years, afraid that they’d see all of their investments disintegrate. But had they “zoomed out”, or kept the bigger picture in mind, they’d know that it’s all a part of the cycle.

If you sell your investments during a downturn, you’re effectively locking in your losses, and potentially missing out on future market gains.

Case study: The 2008-2009 financial crisis

The economy crashed in 2008 and stocks entered a bear market for roughly a year and a half. Many investors panicked, sold their investments, and as they sold and pessimism spread and the markets were dragged down even further.

Eventually, the Dow bottomed-out at around 6,500 (a loss of more than 50%) the U.S. stock market shed $13 trillion in value from its previous highs. Since then, however, the market has been bullish. As of October 2018, the Dow is hovering around 25,000—it’s nearly quadrupled over the past ten years.

Think about this

How can you stop worrying about the day-to-day ebbs and flows of the market, and become a steadfast, steely-nerved investor like Warren Buffett? While you can prepare your portfolio by adopting The Stash Way, here are some other things to consider:


By Stash Team

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This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

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