It’s a lot easier to hype people up about investing when the market is screaming upwards. But as your friendly-neighborhood-index-fund-investing-instagram-influencer-guy, I take it upon myself to try to keep everyone pumped when the market is taking a temporary breather from its unrelenting march upwards. (Like it has this year, so far).
This data hopefully gives you a reason to not get too worried about our the market being down about 15% year to date. (We’re actually UP about 10% from the low point in June). The market experiences drops EVERY year. That volatility is driven by speculators buying and selling trying to guess what’s going to happen over the upcoming days, weeks, or months. But over years and decades, the market always goes up. It HAS to because it’s the collection point for all the profits and growth of the companies of the world. As long as people are still buying stuff, companies will still be profitable, and those profits will (eventually) be redirected into your index fund!
In the 80 years since 1943, TWELVE of those years have seen a drop of 23% or more. That’s about one out of every seven years. If you’ve been investing for less than seven years, maybe this feels really bad to you! But if you invest for 50 years (say from 25-75 or so) you’ll see a year at least this bad about SEVEN TIMES. And if you invest $500/month through all 50 of those years including all the drops? You’d end up with over $7 million. (And yeah I know, you don’t care about being rich when you’re old, but trust me when you have millions you’ll be glad you did it!)
Stay the course my friends! Keep investing early and often. Market pullbacks are expected and part of investing. Buy more shares at a discount and reap the rewards when the market eventually bounces back and continues well past previous all time highs. (Which it will, I promise.)
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.