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I used to look at my investments everyday. Since the stock market as been on a roller coaster ride the past few months, I've tried not to pay attention to the everyday ups and downs.
Every time I look at my 401k or my brokerage account, the balance seems to get lower and lower. With the help of the Yodlee Moneycenter, I am able to not only able easily view the balances and transactions my checking and savings accounts, I am also able to view my investment accounts also. This is a feature that I really, really like but lately, I have been hating it. Everyday, I see the balance in my investment accounts drop by a few hundred bucks. By seeing my investments lose value every day, I am starting to get really discouraged with investing. I keep trying to tell myself that it does not matter about the current dips in the market.
If you are like me and are getting discouraged with the market, you must remember these important facts:
- Time is on your side. If you are 15, 20, 25 years away from retirement, you have plenty of time to make up the current losses.
- Take advantage of the down market. Purchase more shares of your favorite stock or mutual fund at the lower price. Buying shares at various prices is called dollar cost averaging. You are essentially spreading out the cost basis of your investment which will make up for the temporary dips in price.
- Don't panic! Like me, you may be tempted to sell all of your investments and look for safety in a plain old bank savings and/or money market account. DON'T DO IT! The stock market has historically outperformed savings accounts by a few percentage points. (I'm not saying you should not have a savings account. I'm just saying this strategy alone will not help you beat inflation).