Investing carries risk.
If you have forgotten this, the beginning of 2016 has served as a reality check. In order for us to expect long term growth in our investments, we must play the rules of the game. Those rules state that in order to have the opportunity of gains, we have to accept periods of no growth, or even losses (unrealized losses if you stay in the game). In his blog post today, Michael Batnick over at The Irrelevant Investor reminds us that we are not guaranteed, or owed anything from our investments. Especially, in the short term.
But, with longer time horizons, our odds of success increase. Unless you are in your 90’s, a portion of your portfolio still has a long term horizon, which requires exposure to stocks. For millennials, times like now are actually a good thing. You have the opportunity to buy quality stocks (via the mutual funds and ETFs you are most likely using) on sale through 401(k) contributions, monthly IRA (hopefully Roth) contributions, and any other automatic investment plans you may have. You are adding to your diversified portfolio at prices 10-30% less than last summer. Not a bad deal given that these investments are not going to be needed for many years.
“I absolutely believe that stocks are the best game in town. I don’t think there is a better way for the average investor to grow their wealth. However, this is called investing and the price of admission is gut wrenching drawdowns and sometimes years and years with nothing to show for it. If you can accept that this is the way things work, you can be an enormously successful investor.” -Michael Batnick, The Irrelevant Investor
Amen.
Hop over to The Irrelevant Investor to read the rest of Michael’s post.
Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimers page.
