Millennials. We are still new to the stock exchange.
The lucky few who were born in the early 80s and started pouring money into their 401 (k) straight out of college have only been investing for 15 years.
For the rest of us with student loans and parents saying, “Index what?” When we asked her about the retirement options, we probably only had a few years to try this whole stocks and bonds thing.
If the Dow Jones falls 1,400 points in two days it can be a little nerve-wracking and confusing.
Here’s what to do if the stock market corrects itself or behaves bearishly when you have a good 30 years left to retire.
Repeat after me: stock market slumps happen
First of all, you should know that this is normal. The Dow lost 1,175 points in one day in February. We are in the middle of the longest bull (or bull market) in US history, but the market has kept going in the opposite direction.
Here are some other recent dips during our bull market run:
- May 2010: The Dow lost 1,000 points in one day.
- August 2011: The S&P 500 enters a short bear market (20% decline).
- August 2015: The Dow fell over 1,300 points in one week.
And of course we must not forget that we have returned from the Great Depression, Black Monday, the Dotcom Bust and the Great Recession.
As millennials, we can more than wait for the storms of the market because we still have so much time. This has happened to every generation even without the amazing bull market we are witnessing and the people who stay consistent are doing fine.
What to do when the stock market is having a bad day
Here’s what you shouldn’t do: Check your portfolio.
When the market falls, the last thing you need to do is sit in front of your computer, over-analyzing every decision you’ve ever made.
You are young Go outside, spend quality time with your family – don’t waste a thought on what to do with your investments. If you have a well diversified portfolio with a good mix of funds, you will be one step ahead. This is not the time to make up your own mind.
And here is one thing you do can do: invest more.
You read that right! Of course, this is due to your personal preferences and risk tolerance, but think of these wise words from billionaire Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.”
Nobody knows what the future holds, but every investor wishes they could go back to one of the aforementioned crashes and cash in all of their paychecks at rock-bottom prices.
History has shown that the market is always trending in the long term. It’s a hell of a good trip and no one on TV or the internet can tell you where to go next for sure. However, if you are patient and consistent, you will likely end up on the top.
Jen Smith works for The Penny Hoarder. She shares tips on saving money and paying off debts on Instagram at @savingwithspunk.