The market is up today, but what to do when it drops?


Seriously, invest more. So many people get nervous or are afraid of losing all their money when the market has a significant drop. They panic and think it’s best to pull out now while they still have some of their money left, and they are wrong.

Looking at historical data there has never been a 10 year period where investors who were properly diversified that stayed invested have lost money. If you had invested all of your money at the height of the market in 2007 before the crash by mid-way through 2013 you’d be “positive” again, and if you count the fact that your investments are earning dividends that are being reinvested at lower market prices all throughout that 5 year period then you’re better off than when you started.

One of my good friends spent all of 2008 doubling his normal investments every time the market had a 5% pull back and now that the market has recovered he’s profited very well off of it.

Betterment is all about long-term goals, they aren’t a day trader where buying and selling to save or gain lots of minimal dollar amounts per share makes sense. As long as you don’t panic and ride through periodic moments of unease and market downs you’ll come out with a much higher return in the end.

In closing, market downturns are expected and are completely natural. Don’t panic, instead look at this as an opportunity to get your money in at a cheaper price and think of how much more money you’ll have in the end by not panicking.

On the topic of investing, I’m attempting to start an active subreddit /r/BettermentInvesting. Anyone interested in the service or investing in general should check it out.

Posted in Saving Money and tagged , , , , .

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