Written By: Scott Bennett CFP®
It seems as though one thing almost everyone can agree on at this point is that the overall market and economy seems a bit inflated and uncertain. It’s pretty obvious that this skepticism stems from all of the uncertainty we’ve faced dealing with COVID-19 and the challenges and changes we’ve had to confront in our own lives due to this devastating pandemic.
While reading some particularly gloomy headlines ranging from the inflation monster coming to gobble all of our money up, the real estate bubble popping and sending shockwaves throughout the economy, and the Delta Variant finally forcing the huge market correction we’ve all been waiting for, it dawned on me that all of these things did in fact scare me and probably have some legitimacy, so how do I deal with that?
There are the obvious things like making sure our family emergency account is funded, watching our debt obligations, and having a handle on our income and expenses, but what about our long-term money – the stuff that is invested in stock mutual funds – should we be doing anything about that? Deep down I know the answer is no, but I also talk about this kind of stuff daily and have been beating the “ignore the headlines” and “buy and hold” drums for a while, so if I’m having some reservations and doubts, others must be too.
It is exactly those thoughts that made the below two graphs released by Dimensional Fund Advisors so powerful to me. If I can’t stifle some of my fear of the market taking a sharp downturn, what could be a more powerful motivator to leave it alone? Like any true Millennial, the answer came in the form of FOMO – if I do sell out of my long-term investments to avoid the foreseen drop in the market, when would I get back in? It is something we talk about in the 3rd Decade all of the time, but the graphs below show just how costly missing out on the recovery can be.