Does this latest temporary market decline (they are all temporary by the way) have you freaking out about your 401k or any other investment accounts you may have? Should you sell? Should you buy? Should you invest more? The answer to all these questions are...it depends! It really does depend. It depends on your goals, your long term financial plan, and your age. Let's run through these options real quick.
Should you sell?
Let me ask you a question. If you bought your house for $100,000 three years ago and today it appraised for $50,000 would you call your real estate agent and list the house for sale as fast as you could? I'm going to guess you're a sane person and your answer is no. Same thing goes with your investments. There is a quote I love by Dave Ramsey. He often says, "You only get hurt on a roller coaster if you jump off."
The market is very much like a roller coaster. But do you know what I know about roller coasters? If you hold on tight and stay in your seat, you're going to get one heck of a ride and you'll end up safely right where you want to be! If your long term goals have not changed then neither should your strategy. Hold on tight!
Should you buy?
You probably should. I like to buy things on sale and that's exactly what you are seeing now. The stocks of the best companies in the United States and the world are on sale at really bargain prices. I plan on buying and I think you should, too. And here's why. I'm willing to bet in every boardroom of every Fortune 500 company, or any company for that matter, right this second they are making a plan to keep their businesses profitable through this crazy and temporary period in American life. I'm willing to put my cash down on many of these companies. I will bet on capitalism and American ingenuity every single time.
Should you invest more?
Yes. Especially, if you consistently invest such as putting $1,000 every month in your company 401k or in your IRA. Here's why: there is a secret that many investors aren't aware of. It's called dollar cost averaging.
Dollar cost averaging is a strategy in which an investor places a fixed dollar amount into a given investment (usually common stock or mutual funds) on a regular basis. The investment generally takes place each and every month regardless of your emotion or what is occurring in the financial markets. As a result, when the price of a particular security declines, the investor will be able to purchase more shares. More shares equals more money down the road.
I would add one more thing to these options. Should you have a financial plan or hire a financial advisor? Yes. The people that are panicking and selling their investments for losses right now are people without a plan in place and without a financial advisor who they trust. This period in time is exactly why you hire a financial advisor.
We will help you create that plan. So WHEN, not if, the next financial crisis strikes, you can lay your head down every night knowing that you and your retirement are going to be just fine.
The most valuable services we offer are increasing your time, money and peace of mind.
Time - Does it seem likely to you that we could increase your time by at least 1% per year by managing and monitoring your retirement plan?
Money - Does it seem likely to you that we could increase your long-term investment return by at least 1% more per year than you might obtain on your own?
Peace of mind - Does it seem likely to you that we could increase your peace of mind by at least 1% per year by helping you avoid financial mistakes that you might make on your own?
Feel free to contact me for any questions you might have about your 401k's, IRA's, investments, retirement etc. I'm available by appointment in person, by phone, text or email. I also can meet with you online via a video conference. We will help you be prepared...not scared.
Schedule a meeting here.
P.S. Don't jump off the roller coaster.