This is a question we’re all asking ourselves right now. The times of easy day trading aren’t with us right now and so we need to concentrate on long term wealth. When it comes to retirement this is a no brainer. A diversified portfolio of the stock market with a few percentage of bond indexes thrown in is still the best place to put your money. Heck, it’s 20% cheaper than it was a few months ago. For most of us, retirement is a long way away and this little blip in the road means nothing to our overall gain. You get cheaper shares now, that is the only difference. It all averages out and your timed buying is proven to add little value to the final value.
One of the worst things you can do right now is jump ship. Selling down at these levels are silly if you don’t need the money. Sure it could go lower but who cares. You should be long term investing, meaning keep the money in long term. Selling solid stocks to try and make it back on high risk stocks is equivalent to a gambler doubling down, a sure road to loss.
So what do you do? It sound so basic, but the same thing you’ve always done. Put your money in stocks with good growth, improving, earnings, and a good business plan. Stay out of cyclical markets, “hot” stocks, or stocks based on one product. Never put all your money into one sector or high P/E stocks. Put your money in consumer goods, oil, technology, travel, insurance. I break it down to two types of stocks. Companies that sell things you HAVE to have and companies that sell things you WANT to have. The first are steady and strong and the latter grows as their products become hot. I have had luck riding the steady consumer goods train and then picking out the products that people like. Occasionally you’ll get a stock like Intuitive Surgical (ISRG) that is both. They have the best technology and they make products that help perform surgeries you have to have. It covers both sides. If you just don’t feel comfortable picking out any stocks that’s what mutual funds are for. They are labeled by what type of investment you’re looking for.
So why did I spend the time to write an article telling you to keep on investing? Because some people need a slap in the face to remind them. There is nothing wrong with keeping some extra cash , but save the extra cash by lowering your expenditures not by lowering your retirement savings.