Stocks are Plunging! Don’t be mad, be glad.

I apologize for not posting lately, it has been a busy month for me and it has been hard to get the motivation to sit down and write a blog post. But, something has happened recently that I believe is important to talk about. So I would like to write a brief article on what has been happening this past week due to concerns of the coronavirus.

The Stock Market is Dropping

Now for many in the FI community this is a great thing. We know that the stock market dropping is where we are able to take advantage of low stock prices by buying them “on sale” or at a discounted price. For others this is a very scary situation where they feel they may lose all of their hard earned money. Situations like this where the Dow drops over 1,000 points in a day is exactly why so many people don’t invest in the stock market. They feel it is way too risky and would much rather put their money in a savings or checking account where they know it will be safe. 

What we have to understand is that drops in the stock market like we have seen this week are completely normal. This happens multiple times per year where the market will drop at least 10%. Yet, so many news networks, friends, or online articles scare us into thinking that this is a terrible thing and that you need to pull your money out right away before you lose any more. So far this week I’ve lost approx. $20,000 yet I’m not worried one bit. In fact I have been excited and have been adding extra money into my stock accounts this week to take advantage of the low prices.

If the Stock market crash of 2008 taught us anything, it is to stay the course. Do not pull money out and just let the market do its thing. People who did this in 2008 have now close to tripled their money just by taking advantage of time in the market and continuing to invest when times are tough. 

So as you nervously look over your investment accounts today this is just a gentle reminder to keep your money exactly where it is.  If you are able to, buy more stocks while the prices are low and continue to invest in low cost index funds to prepare yourself for the future. Remember, don’t panic this is only an opportunity to benefit your future. 

Thanks for reading, 

Matt