We all knew it was coming! We have always been 100% equities, and it has paid off for us. We stuck it out even when we lost 50% value…when was that, 2005 or 2009? I was getting really nervous about this whole thing, so 2 weeks ago we pulled 25% for the very first time, and put it in a stable accounts. So glad we did, at some point we will put it back in equities.
You need to be aggressive when you are young and stick it out. Someone said if you aren’t planning to retire sometime soon, keep it in equities. Good advice. If you are 10 years out from retirement, this is where a good financial planner can give you ideas on how to move to bonds, etc. at what rate, how much.
I stuck it out during the downturns in 1987, 2001, and 2008. Today’s action is relatively mild by comparison. The close today for the S&P 500 was almost the same as the all time high set on either Nov 31 or Dec 1 (I forget which). Of course that all time high didn’t last more than a week.
For those of us who are retired, particularly those retired with two kids in university, it does pay to have some of your money in cash so that these glitches only cause mild indigestion and nothing worse.
Buying stock, particularly for retirement, is the easy part. Just keep buying on a steady basis for many decades. Selling is tougher. If the market has gone up it feels like you should hold on while it goes up more. If it has gone down it feels like you should hold on until it recovers. Figuring out when to sell is tough.
Now might be a good time to pick up some inflation linked bonds & notes and perhaps take a look at managed funds. Fidelity has lots of choices and can probably offer great service to new investors. However they are so large that many of their managed funds may perform as de facto index funds. The next few years will be an opportunity for bright young fund managers to prove themselves, wish I knew who they are now!
2008 was a once in a lifetime event. (Hopefully). The market has been going straight up. A few days correction is normal. The key to long term is to keep investing and change you allocation as you age and/or your risk profile changes.
I prefer age-based funds (whether its for college 529 plan or retirement). Remember, the S&P 500 index has gone up 300% since 2008. It’s only a matter of time for a correction of 10 - 20%.
Right. You don’t have an online portal? To look where your money is, move it about, check the fees and costs? Is it some complex vehicle?
You should make a habit of checking it, period, these accounts get hacked regularly.
@romanigypsyeyes , our financial planner has always told us to think long term. The market has always had ups and downs, and this is what they call a “correction,” a shift after years of going up. It is never wise to respond to shifts like this, especially when you are young.
Keep the money you are saving where it is, and make sure you have enough liquidity to pay for your housing, food, and transportation for a few months.
Download the Robinhood app, they said! Invest in the QQQ, they said! Hmph.
I only put in 2k, so it’s more play money than serious investments, but it’s addicting to see how it’s doing every day. This week, not great! But I don’t mind because I know in the long run it’ll be an upward trend. Gotta say, though, as an engaged 24 year old, I am so confused about what I’m supposed to be doing with my savings.
Yes the money stuff can be confusing and scary. Just sitting on cash can seem like a great default position, until you realize that due to inflation your pile of cash is like a slowly deflating balloon. Your money can work for you, like the shoemaker’s elves at night, making even more money without you having to do anything. But investing comes with risks, so every once in a while those elves might clean out your fridge and run off. But eventually at some point they’ll come back with all your food plus even more if you can just wait them out.
Putting your extra cash into QQQ or SPY is a great idea, so long as it’s money you don’t plan on spending within the next 10+ years. Just remember not to panic on dips - stocks take the stairs on the way up, and the elevator on the way down.
Philophically, for me at least, investing in the stock market reflects my belief in the underlying country as a whole. If you think the US will continue to grow and improve over the coming decades, then the stock market as a whole will grow too.
A different (and not optimistic for everyone) version would be that if you believe that future economic gains will increasingly accrue to holders of capital rather than those who sell their labor, you want to collect some of those gains by investing in capital markets. Even if you oppose such a trend, you will have more power to take whatever action you desire from a position of wealth than a position of poverty.
^^ Oh yes, absolutely. The political and economic system in the US is clearly biased towards business and shareholders. You only have to look at the tax system, which charges more for gains from labor than gains from sitting on capital. It’s a strong argument for being on the right side of the rewards system (by owning stocks).
This is not 2008… My only concern is to what extent the current political shenanigans could erode confidence in the US as a bastion of political stability.
as an engaged 24 year old, I am so confused about what I’m supposed to be doing with my savings.<<<<<<<
MAx your 401K ( $18,500 ) IRA roth (5500) most 24 yr olds won’t be maxing that so unless these options are optimised first, fix that. Emergency savings into CD ladder, and make sure your mortgage is a low a rate as possible and fixed. Then you can worry about investing (beyond your 401k options)
My theory is the market regroups because the large pool of very wealthy investors (I refer to them as "the Hamptons folks) turns right around and buys low. Not scientific.
Our investments bounced back after 2001 and 2008.
Romani, Fidelity will advise you as benefits Fidelity. I’ve got one 401k they manage and can only see value as of last Fri.
You need a planner who works through your risk tolerance.
“and it would have to drop 10 percent or more to be considered a “correction.””
If you look over the past week’s activity, it’s pretty much there.
“You can also set stop limit orders on all your holdings to limit your total exposure to loss – but you don’t want to get stopped out too early.”
And that would be selling into a downdraft. Not ideal for many situations/assets.
“Just remember not to panic on dips - stocks take the stairs on the way up, and the elevator on the way down.”
Love this and so true.
“Fidelity will advise you as benefits Fidelity. I’ve got one 401k they manage and can only see value as of last Fri.”
You should be able to see your valuation after about 6pm or so ET at the end of every market day. If not, you should be talking to your employer about that. That’s not on Fidelity’s side as Fidelity can and does mark to market daily and has that available to other 401K customers. I think it is odd if you don’t have that access and wonder if it is specific to your employer.
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