As Warren Buffet says, “the stock market is a device for transferring money from the impatient to the patient”.
During times of market volatility, pullbacks, rallies, bear markets, bull markets, it is essential to remember that Time in the Market always beats Timing the Market.
The simple truth is markets go up and markets go down. Sectors come in and out of favor. Every aspect of our economy is cyclical.
Talking heads make predictions of booms and crashes daily. We listen to our favorite TV market commentators flip-flop from recession to bull market and correction to rally quicker than the blink of an eye. Entire news networks have been built on "experts" giving varying market movement opinions and predictions, cycling 24 hours a day. This leaves viewers confused and creates a feeling of fear or missing out.
Why do financial pundits not tell you that time in the Market versus timing the Market historically wins out? Because tried and true systematic investing and withdrawing, asset allocation, and rebalancing is not sexy or exciting, does not sell ad space…and what would the networks and commentators do with all that dead air?
Just remember, You must Keep Calm and Keep Investing in every market cycle.
Whether you are building your wealth or living off of it, the fact is your contributions and withdrawals will be made during both good and bad markets.
If you are in the accumulation phase, down markets can be your friend. Every time a contribution is made to your retirement plan you are buying shares regardless of price. When the market is down, you are buying shares for less, so consider your retirement on sale!
On the other hand, when markets are down and you are withdrawing your living expenses from your investments, you are having to sell more shares at lower prices and then have fewer shares working for you. Your strategy should have a combination of income-producing vehicles distributing dividends and interest to fulfill your needs and an element of growth to keep up with inflation.
If history is an indicator, sunny days and calmer seas are ahead.
We are here to coach you, helping you navigate and ride out this storm and many more to come. If market conditions are making you sea sick, schedule your coaching call easily and instantly on our virtual scheduler.
Investing involves risk including loss of principal. No strategy assures success or protects against loss.