The other day I was sitting in a conference room with some coworkers. Our company was restructuring its retirement plan for employees. After the changes were announced, a general conversation started taking place. The financial recession of 2007 through 2009 came up. One employee joked how he lost over $3,000 in the market downturn. While it isn’t a large sum of money, it was enough of a loss for him to take his money out of stocks and place it in bonds. He has had it in bonds ever since.
It is often said that losing money is more painful than gaining or winning money. It is human nature for us to make rash decisions when our livelihood is being threatened. And yes losing retirement money does affect one’s future quality of life and thus his or her livelihood.
My fellow coworker got too emotional during a time when he shouldn’t have. When the market goes down, we hear “SELL, SELL, SELL”. And when it goes up, “BUY, BUY, BUY”. Don’t watch the news, don’t watch CNBC and their stock reports, and please don’t get emotional. Investing consistently over time is the best way to ensure that you invest during dips and spikes in the stock market. Right now the market is currently down about 6% from its all-time high. I consider that 6% a sort of holiday discount that we should all be benefiting from.
Budget Smart, Invest Wise