Why a Market Downturn can be Positive

With all the scares of Coronavirus right now, it's easy to go into panic mode. Trust me, I'm there too. Things seem uncertain and people are raiding grocery stores like we are going to be locked in our houses for a year.


Thinking about your finances during this time can certainly seem a little...unnecessary. "Everythings tanking anyways, what's the point? The world's ending - what do I need good credit for anyways?"


But I BEG YOU to see the positives in this very bad looking situation. And any situation TBH.


If you're young and still have plenty of years until retirement; this is not the time to listen to the media and grandparents who say to pull all your money.


So here are 3 reasons that a market downturn can be a good thing:


ONE:

Now is really an excellent time to BUY! If you have low or no debt, have a good grasp on your spending and saving situation, and feel comfortable investing, then now is the time. Because stocks and mutual funds are basically "on-sale".


For example, let's say you have $1,000 to invest and you pick a mutual fund that you feel comfortable with and see that it's currently $24.68 per share. You also realize that a few months ago the price per share was much higher at $28.87.


So with your $1,000, you will now get 41 shares (at the $24.68 price) instead of 35 shares (at the $28.87/share). Now that's a deal!


So when the market does start to recover, you will have an extra 6 shares working hard to earn you more money!


TWO: Historically, the market has rebounded after a downturn. It's a natural cycle like with most things in life. Up and down is just a part of every aspect of life. Of course, past performance does not indicate future returns. However, it can give you some comfort knowing it probably won't be like this forever.


THREE:

"Stay the course". These famous words of John Bogle (founder of Vanguard) help to remind us that if we have a plan in place for retirement and you are still a few years until that day, you should not change your plan.


__________


Ultimately, it is your money and you need to feel confident and comfortable with whatever you do. I know these can be scary times and our gut reaction is to take all our money and keep it "safe" in our underwear drawer.


But you have to remember, there is a FUTURE. You need to be able to look past the next 6 days in order to see that next 6 years.


I know money is emotional. And it can be hard to think clearly when it comes to that. We don't want to make the wrong decision and we don't want to do something that could jeopardize our future. But when we panic and feed into the news outlets, our discernment can go down the drain.


I know we can get caught up in all the "excitement" but just remember to look 6 years into the future and stick to the plan that gives you your best possible future with what you've been given.


&& I'm always here if you need to talk yourself off a money ledge.


xo,

Madison



DISCLAIMER: Returns are not guaranteed. Different investments result in different returns. Investing involves risk and possible loss of money. Information in this article may become outdated. Do your own due diligence before investing. The information contained in this article is for informational and entertainment purposes only. Read my full disclaimer HERE.

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