Hi ,

 

We went out to dinner last week with some very good friends. Both are retired, with enough savings to last The prior week, we had a big family dinner. Also got word from my brother in law recently, wondering about the markets and whether it's a good idea to sell now.

A common theme popped up during all of these chats - the falling stock market and the declining bond market. Every one of these group members had enough money and were old enough to have experienced prior stock market slumps. Yet, there were concerns about their losses and worries about when the markets will turn around.

Now, I get it. Our family has experienced financial losses this year, just like all investors. 

And of course I'm not thrilled about watching investment values drop. 

But, this market drop was expected. Most investors who know a bit about the investment markets realize that the reason that stock and bond investments offer greater returns than a certificate of deposit is because investors demand higher returns for the possibility of financial asset declines (in other words, your investment values dropping). 

 

During the last 10-12 years, we've become complacent and gotten used to markets that seem to only go up. But, that is abnormal. There are booms and busts in business and the economic cycles. Then there are outside factors placing pressure on asset prices like the war in Ukraine, rising inflation, and supply chain issues. 

 

Hang in there. If you don't need your investment money now, then stick with your asset allocation, continue investing regularly in your 401k, IRA or investment account. At some point investment markets will reverse, and move upwards again. No one knows when, but it is very likely that unless the entire global economy collapses, the U.S. and international financial markets will continue to serve consumers and grow their businesses. And if you're invested in the stock and bond markets, you will ultimately benefit. 

In fact, the most successful investors are the bold ones who continue to invest when markets are down. And that's a sound strategy to boost long term results. Don't worry about picking a bottom, because it is nearly impossible.

Take a deep breath. If you're okay with your current asset allocation, then you don't need to check your portfolio all the time. Stick with your plan and live your life. If history is any guide, markets will rebound and so will your portfolio. In general it's not a good idea to sell during market drops and hope to get back in when they start to rebound. 

Timing the market is notoriously difficult. You need to be right twice, once when you sell and the second time when you buy back in.

For investment ideas, here are a few articles we've recently published:

Are I Bonds A Good Investment? (Fight inflation and earn a US government backed interest rate of 9.65%)

Risk Less and Prosper Easy read about ultra-conservative retirement investing strategy

Vaulted Review Physical gold investment app with low investment minimum

What Are TIPs Bonds? Pros, Cons and Features - Another government-backed conservative investment to protect your cash from inflation