Updated: Mar 4
It’s totally normal to feel anxiety while watching a major market dip. You just bought a bunch of stocks at the high! This always happens! Should you sell to avoid further losses?
If you go to your balance history and zoom out with the time frame feature (1-month, 1-year, etc.), your overall growth will likely still be way up from previous years as dips and rises are natural fluctuations in the market. I don't lose sleep over this.
In March 2020, one year ago, we saw the market get absolutely obliterated. To everyone's surprise it recovered so fast that if you sold at the low, you missed out on MAJOR gains. Sadly for me, I still didn't really care about the market at this time. My 401k dropped so much I refused to look at it.
I hadn't yet learned that I could have been one of the wise who shovelled money in and bought at the low low lows, only to see incredible gains as the market completely recovered and then some.
As I have progressed along my FI journey, I've developed an investing strategy. I am *not* a day trader: I buy and hold long term. When the market goes down? Woohoo! Our favorite stocks are on sale.
This is why it is important to have dry powder (cash reserves) on hand in your investment and/or retirement accounts so you can jump in when you see a drop. In other words, buy the dip.
Here is a graph showing the major market crashes since 1950. Keep buying and keep holding, because you will see long term growth.