Whether we want to debate what a ‘bear market’ is (20% drop for at least 2 consecutive quarters) all we know is December turned downright ugly and everyone is losing money. You and I, the average investor, is getting attacked by something and it sucks.
It doesn’t help for me to tell you these downturns are inevitable, or that they are healthy for the market, or we can’t go up forever. What you do want to know is what can us, the average investor, do right here right now in this market.
1. DON’T FRIGGIN’ PANIC – I will sit here and tell you it is a fact that if you try to time the market you will lose. The odds are against you. Even while you have heard this a million times 90% of you are going to panic and pull your money out thinking you can beat the market. Leave your money alone. If you were happy with your fund allocations before the downturn you should be happy with them now. What we have been preaching for years is to be in the best funds at all times. Do I have to repeat Fidelity Contra Fund (FCTNX) again?
2. FEED THE BEARS – This is completely contrary to what your brain is trying to tell you, but you need to do whatever it takes to increase your deposits into your retirement funds NOW. Please, you have to trust me on this. Even if the market keeps dropping you will be buying shares into your amazing funds at lower prices. Doing this one action during a down market WILL catapult you to higher balances later down the road. During the 2008 financial crisis when the markets plummeted I increased my deposits into my 457 account and now 10 years later I am 10 times higher than at my lowest balance level in 2009. I guarantee this one move works. It’s mathematical proof! If you don’t do this my mom will be sad.
3. REVIEW YOUR ACCOUNTS – If you are not in the best funds that consistently beat the S&P 500 or in a simple Vanguard index fund, make those changes now. If you are unsure we ONLY advise you to seek the assistance of a financial advisor that is either with the Garrett Planning Network or the National Association of Personal Financial Advisors. Both of these have fee only advisors that have nothing else to sell you. This is important. If you want to keep things simple you can always put 100% of your money into the Vanguard Index Fund that matches the S&P 500 index – typically the Vanguard Institutional Index Fund (VINIX).
We have a whole new generation of investors who have never seen a downturn like this. You gotta trust us when we say load up your funds now to the max and know everything will eventually go back up.