Treavor Dodsworth CFP®, CPA, CKA®
#164 - Don't Give Up
Investing over the last year has admittedly not been very exciting.
From the start of 2022 to mid-June 2022 the Russell 3000 Index dropped about 25%. Since then it has see-sawed back and forth. Currently, it is still about 20% off its high.
A couple of thoughts:
First, extend the timeline and remember how you have been rewarded for investing in the past. From the bottom of the COVID crash (almost exactly three years ago - March 2020) to the start of 2022 there was a huge run-up - well over 100%. $1,000,000 invested at the bottom of the COVID crash was worth more than $2,150,000 less than two years later. $1,000,000 invested at the bottom of the COVID crash is now worth about $1,750,000. Granted $1,750,000 doesn’t sound as nice when it used to be over $2,150,000 but if you would have told me in March of 2020 that my investment would be worth 75% more in three years I would have been pretty happy. Those that were diligent during the COVID crash were rewarded.
Second, I believe diligence will pay off again. If you believe at some point the market will return to its previous high, that means from this point to some date in the future you believe you will have a positive 20%+ return. Granted we don’t know if that will be this year, a year from now, three years from now, etc. and there could be additional downturns in between. That said, even though we don't know the exact timeline, we do know buying the Russell 3000 now ensures you are buying about 20% off the previous high.
Even though the last year hasn’t been all that exciting from a return perspective, remember investments have rewarded diligent investors in the past and also remember that downturns give you the opportunity to buy stocks at discounts.
When I reference market or percentages I am referencing Russell 3000. All data for Russell 3000 from Yahoo Finance.
A Wealth of Common Sense - More Money Doesn’t Make You Better at Managing Your Finances
“For some people, success in one walk of life can actually make you even worse at managing your own finances. I know plenty of wealthy people who are terrible investors because they’re overconfident or assume their level of wealth guarantees them access to secret ways to make money that are only available to the rich or famous (hint: there are no secrets).”
Thank you for reading!
Images from Pexels: photographer Andrea Piacquadio