World Stock Markets had a terrible end of July. Did you lose money in your portfolio? Don’t panic; remember Investing is a marathon, not a sprint.
A good approximate rule of thumb is that for every 3 positive years for Stock markets, there will be one negative year to varying degrees. Now these positive or negative returns can come completely randomly, which is why it can be so nerve racking to be an investor in good times or bad.
But any financial plan, where the management of the investment portfolio is so crucial to the plan’s success, has to take a long term view. Even in good market years, there can be parts of the year with significant declines or corrections. Anecdotally, I’ve heard many times from people how the eighties and nineties were always up, up and up. That may be the image of what that long bull market seems like now, but we live in the here and now, and living through a 1 or 2 month decline in markets can seem like agony. But the truth is the eighties and nineties had volatile times just as we do today. We just tend to forget, since it all worked out in the end.
Most people who have maintained a widely diversified and balanced approach to their investments will find that currently they are probably still up for the year. More importantly, they will see that they are likely up for the long haul whether that be 5 years, ten years or thirty years. Decades…That’s the kind of time frame we invest for. Not a week here or a month there.
So don’t worry yourself into panic, just be patient. Be okay with living in the here and now.
Markets will go up and markets will go down, but if you’ve built a solid foundation, it can stand the test of time.
