Ep 49: Forget Emotions, Stay Invested

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Volatility isn’t fun. When the stock market is down, it really takes a toll on our emotions. Emotions lead people to do things that could ruin long-term investing results. Today, we’re sharing why you should stay invested.

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Show Notes

When the market is volatile, people sometimes make emotional decisions. Today, we’re sharing why you should stay invested instead of letting emotions ruin your results.

So, what is market volatility? It’s the ups and downs in the market. It’s human nature to focus on the downs and remember them. But if you’re a long-term investor, you need to look at the value of your investments compared to where they started.

If you’re investing for at least five years, you’re a long-term investor. You should have some cash on hand, at least 3 to 6 months of reserves.

We read a great article on J.P. Morgan’s website about the case for staying invested. The article found that the latest AAII Investor Sentiment Survey showed that less than 20% of respondents feel “bullish” right now, the lowest reading in more than five years.

“It’s no wonder that we’re hearing more questions about whether it’s time to ‘get out’ of the market, or at least hold onto excess cash until the storm passes,” according to the article. “The short answer: It’s not! In fact, for most long-term investors, it’s probably actually the time to stay (or get) invested. You might view that as a reductive investment cliché, but hear us out.”

So, why stay invested? Diversification works. You need to understand your asset allocation and make sure you have the growth bucket and war chest bucket.

Listen to the full podcast or use the timestamps below to jump to a specific section. 

[3:15] – Market volatility

[6:48] – Long-term investors

[9:21] – Diversification

[19:13] – Emotions

[22:13] – Timing the market

[25:08] – Always a worry

[28:57] – Staying invested

[34:47] – Behavior coach

Thanks for checking out this episode. We’ll talk to you again soon.

 

“So, what is market volatility? It’s the ups and downs in the market. It’s human nature to focus on the downs and remember them.”

-Scott Sierens