Short-Term Events VS. Long-Term Investments

During the early hours of Russia’s invasion of Ukraine, stocks plummeted, and investors saw their savings in 401(k) plans disappearing. Many people were afraid there would be more losses to come. However, let me remind you that just hours later, they regained all their losses for the day and then some, as the market made a sharp reversal. This is called market volatility.

I invite my clients and all those with retirement investments to keep their eyes on the long-term objective of their investments. Retirement is a long-term goal. I remind my clients time-and-time again that with a long-term goal one cannot place emphasis on short-term events. Historically, there has always been volatility in the stock market. As you get closer to retirement you want to make sure that you stay the course and continue to review your goals with your financial advisor.

Getting Caught Up In Dramatic Events As They Unfold Rarely Leads To Wise Decisions

This applies to life in general as well as to financial decisions. Life’s dramas are going to unfold whether we allow ourselves to get caught up in them or not. You can probably look back on your own life and test the validity of this idea. We’ve all had dramatic events in our lives and we’re still here, moving along despite whatever we’ve been through. And it is my opinion that despite what some people would have you believe, unless you are actively involved in having to make important decisions around a specific event, reacting to any dramatic event that doesn’t require your involvement only serves to generate fear and adds to the overall volatility and chaos.

Please keep in mind that sudden downturns in the stock market are “unrealized losses” for patient investors. But the moment you act and sell off investments, they become “realized losses.” Impulsive actions in the stock market almost always end up in disappointment.

Keep The Faith

None of us knows how any historic event is going to play out. We can contribute to the event by knowing that whatever happens will ultimately be for the good of all. That’s called having faith. Even when things look terrible, the underpinnings of great faith assure us that those things are happening for a reason. If you could have prevented any event from happening, you would have been at the very center of that event. So, please, relax, be patient, have faith and keep putting one foot in front of the other.

If you would like to review your retirement plan, or just want some reassurance, give me a call.