It hurts to look at our 401(k) and brokerage statements
right now when we compare them to year end.
And you may be thinking that you wouldn’t have lost money in the stock
market if you kept all your savings in the bank.
But you also wouldn’t have had the money to
lose in the first place.
Losses in US stocks
from recent highs are only giving back the gains you received over the last 14
months.
If you weren’t in the market,
you didn’t earn the money and then you didn’t give it back.
But chances are, if you were in the stock
market over the last couple of years, you have also been in it over the past
several years before that.
And US stocks
are up an annualized 10% over the last 10 years even after accounting for the
recent declines.
So you can fear the
market and keep your savings in super safe assets or you can look at a
long-term chart of stocks and realize that long-term success as an investor comes
with occasional short-term stress.
In
the last 10 years, investors in a “total stock market index fund” have seen $100,000
grow to approximately $260,000 today while investors in less-volatile “aggregate
bond index fund” have seen the same investment grow to less than $150,000.
Perspective helps in times like these.
(Past performance may not be an indicator of
what to expect in the future and your individual circumstances should be
considered in any investment choice.)
Larry Pike, CFAClient Priority Financial Advisors LLC
www.clientpriority.com
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