Remain Calm and Carry On

First, you are not the stock market. Chances are, your portfolio is a diverse mix of investments. Many people save in target-date mutual funds that do the work of diversification for them. Vanguard’s 2035 fund was down 4.6 percent last week, better than the 5.77 percent decline in the Standard & Poor’s 500-stock index from where it closed a week earlier.

Second, if you have been investing in stocks in the last six years, you most likely are a big winner. It’s generally a bad idea to look at your investment statements too often, but take a quick peek.

That outsize gain you see is one reason you are in stocks in the first place. Plenty of research shows that if you miss just a few days of the market’s biggest gains, your long-term portfolio will suffer badly. If you decide to put a bunch of your money in cash this week, how will you know when to get back in the market? You’ll probably be looking for a sign, and that sign will be the very rebound days that you will have missed out on.

In case it needs to be said, Ron Lieber says what we would say today, and have said in general when it comes to investing for retirement, which is: none of the money we’ve set aside for retirement matters to us until we’re about ready to retire, so just keep doing what you’ve been doing and remember you’ve got many years ahead of you (if you’re like us). Maybe pour yourself a nice mug of tea and eat some pie.

Photo: Jane Rahman

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