The last few days our investment portfolio has taken a bit of a hit (to the tune of thousands of dollars). The news seems to indicate that a lot of the downward trend is attributed to the political situation we’re in with North Korea (and maybe now Venezuela). While, we may worry about the latest rhetoric out of Washington, we surely are not worried about the stock market’s performance. Buying stocks is a long game, and ultimately it’s been quite profitable for those willing to stomach its ups and downs.
When might we worry? If we weren’t in the contributing part of our investing life. But, if we were in withdrawal mode our portfolio would look much different than it does now (less aggressive). We’ll want our money better protected when withdrawing.
Why might we even look forward to some drops in the market? For now, a portion of all our paychecks, credit card rewards, and the re-investment of all dividends keeps us in an “always buying” sort of loop. Since we are still buying shares, when there’s a temporary drop – we buy them at a discount; and honestly, who doesn’t love a good sale?
What is the worst that can happen? This is obviously a very individual answer and one that everyone must consider before deciding on how aggressive/conservative to invest and overall ability to tolerate risk. For us, we would have to work a bit longer before executing the big plan. While we’d be disappointed, it surely wouldn’t be devastating. In that, we are fortunate, so we don’t have a terrible amount to lose (hence the aggressive portfolio). It’s a delicate balance, but timing the market is a fool’s game. Most that try to time the market (even the costly professionals) fail. In order to enact our plan on time we are betting that we’ll more than recover from this, and the stocks will continue their upward tick over time. Which, based on history, doesn’t seem like such a bad bet.
We’ve invested pretty steadily in the market, and have more than recovered from the market crash of 2008. I remember family and friends pulling out of the market like it was a fire sale in 2008 (at rock bottom prices), and investing in bonds or even cashing out. At the time, we were pretty young, didn’t have a lot invested, and knew we had time (and probably a little lazy too). Turns out inaction was the best action. That’s what we’re betting on this time too.
Disclaimer: I am not a financial professional and am only sharing my personal experiences. If you want financial advice about your personal situation, talk to a professional.