The Stock Market and Your Retirement
Today, President Trump announced he and his wife have the corona virus, and stocks tumbled. On Wednesday stocks rallied up with hopes of a stimulus deal on the board. It's not just politics or a company's quarterly performance report.
Anything these days is game for having an impact on the market. Often times it is reactions (by means of the media telling you how you should feel) to events that cause the swings, based on triggers like fear, uncertainty, expectations and assumptions. By the way all of these things are often an emotional response, not a logical one. These up and down yo-yo events happen all the time. When the jobless report comes out, when an owner of a tech company sneezes or says something that offends one party or another. Yep, I'm being sarcastic, but not unrealistic. Swings are commonplace, especially this year with so much turmoil.
After the big stock market drop in April many people held their breath, waiting for a complete fallout or crossing their fingers for a strong, fast rebound. Some frantically called their broker who likely gave the canned response, "You have to ride the wave of long-term investments. If you pull your money out now you won't gain it back." True.
But if it weren't in the market to begin with? you wouldn't have lost it and be in the powerless position of waiting to see what will happen.
It's not just a matter of watching the numbers and waiting for a rebound to where it was prior to the fall. It's a matter of math! Look at the chart below:
Even a "recovery"of the market doesn't equal a full recovery of your money. If you lose 20% on volatility, you need to earn 25% to get back to even. Stock market ups and downs will cost you a lot of money over the years - it’s time to consider other options!
Stocks are a massively insecure investment, but this rarely makes headlines. Losses are just a part of the expectation. So common is fact that Investors Business Daily has a recent article titled: Still The No. 1 Rule For Stock Market Investors: Always Cut Your Losses Short, referring to the discipline of selling at a loss and accepting that loss instead of holding on to a stock hoping for a quick comeback and in turn being stuck at a larger loss. Think about that for a minute.
The majority of financial advisors and brokers, managing YOUR money are taught that losing your money is ok! But they still get paid to manage your money?!?
People, this is not acceptable! Aside from weathermen and women, who else gets paid to be wrong? If you have money in the market, it's almost certain you are paying someone a fee to manage that money for you. Stop losing money and paying others to lose it for you!
That's a big reason we advocate to not give up control of your money. You can SAVE for retirement without the risk and with predictable gains. Work smarter not harder. 👍