So. Britain voted to exit the EU. What’s that got to do with the US stock market? Well, I guess a lot, as it plunged the day the news was released, or maybe, the day after.
Yep.
The market took a Nose Dive, again.
Why?
I don’t know. Emotion is the only thing that I can think of. Fear.
Fear that it’s all gonna go “South.”
Well, it did. The market plunged.
BUT!
I didn’t lose my money.
What? Shin, how did you not lose any of your money when the market plunged?
Well, my portfolio is still larger than my initial investment. AND! I’ve been drawing off each month. It’s paying for my early retirement.
I’m drawing money from my portfolio, and the market went South, but I haven’t lost any of my money.
?????!!!!!
I know! How the hello does this compute?
Well, Hal, the only thing that I’ve lost is growth. It wasn’t my money that I lost, it was the money that my money made. MY money is still in my portfolio!
If you look at the history of the market, you’ll see that it’s gone down and come back up again. Mostly up. That’s how it works. That’s why the market is the place to invest.
Check out these articles:
S&P 500: Total and Inflation-Adjusted Historical Returns
Is the 7 Percent Return for Stocks Extinct?
8 lessons from 80 years of market history
Investors question wisdom of 10% rate of return rule
How Have Stocks Fared The Last 50 Years? You’ll Be Surprised.
Now, here’s the thing. Read each article to the end. Don’t give the titles a second thought.
So, I haven’t actually lost any money in the market, and these articles back up my thoughts on staying in. I’m in it for the long haul, the historical performance. That’s what keeps the market in business.
So, what did you get from these articles?
I love the long-term perspective you have on investing. It’s the perspective more people need to have. When I saw the reaction the markets had to Brexit I was wishing I had a pile of cash to invest, because I’m certain the market will recover over time (already has to some degree).
Thanks DC! Yep, I learned early that the stock market is about time, not timing. We’ve been in the market since the mid ’90’s and we’ve never lost any money, only some of our gains. We’re still up 17% above our March 2013 portfolio, which is when we moved our funds to Fidelity from a number of other firms. I know we’ll see more downs, but historically, the Ups outnumber the Downs.
Awesome way to look at downturns. I’m sure it can be particularly intimidating when you are living off of your income in early retirement — but having that level of control is impressive, and important.
I used the Brexit opportunity to buy a few extra shares — and it looks like we’re already seeing a turn around.
Thanks for sharing.
Well, Rob, I learned a bit ago that the market is not about timing, but about time. Glad to hear that you got in on the “Sale”! That wasn’t timing, that was level headed thinking!