Dear Younger Self....there will be dips and crashes but the market always goes up

 And stop overthinking it, just start small and start now.

What you need to know:-

1. Guaranteed – the stock market goes up and down.  When it goes down, it will always bounce back up, always, and continue to grow.  Looking back over the last 100 years of the US stock market, history has shown us that the market always bounces back after a dip, and over time it’s an upward slope, like a tick or a tilted hockey stick. The way to avoid losing money is not to panic and sell when there’s a dip.  This is what a lot of people end up doing and they lose money.  The best advice I’ve heard when the market dips is to do nothing, ignore the noise, and don’t check your investment account.  Your pot of money will eventually go back up to the level it was before and then some. 

2. Expect the dips, they will happen. Looking back over 100 years of stock market activity, it goes down 10 – 15% every year (roughly every 11 months) but then goes back, it will go down 30% once every decade but then goes back up, and every 50 years there will be a recession/an economic dip when the stock market plummets 50% but it will go back eventually.  

3. How to prepare for the dips….the golden rules

   1. Breathe in for 5, hold for 5, breathe out for 5.  

   2. Ignore the noise in the media.  Remember – it will go back up and that upward right tick will carry on growing over time.

   3. Do nothing, don’t sell.  A nugget of wisdom…. If you do nothing when the market dips, you don’t lose anything.  You only make a loss if you sell.  
      
      My first dip was nerve-wracking.  In March 2020, at the start of the pandemic, my global index fund went down in value by 30%.  I must confess, the idea of losing 30% of the value of my hard-earned savings and investments made me feel sick.  But I listened to JL Collins, author of the best-seller ‘The Simple Path to Wealth’, and he talks about how he managed his mind during dips in the market and the importance of not panicking and selling but riding out the storm and doing nothing.  And sure enough, markets completely recovered within 6 months, and I ended 2020 with a very healthy increase.  Incredible really given how the world was turned upside down that year and essentially closed down. My second dip was at the start the Russia/Ukraine war – 15% - it was still tricky but I managed my mind and thoughts. 

   4. Be in it for the long term and stay the course, and then be prepared to be blown away by the amount it grows.  If you’re investing in an index fund for the short term, for example, i.e. you’re looking to pull your money out of the stock market in 1 – 3 years’ time, then it’s high risk and there is a strong chance you’ll lose money.  If you can leave your investment pot well alone for a minimum of 10 years, you’re giving yourself the best chance of a good return.    

   5. Don’t have too much cash sitting in savings.  We read the small print…..and sometimes decide the risk is too great when we see ‘the value of your savings can go up and down at any time’.  We don’t want to lose money at the end of the day so we play it safe and leave savings in cash.  But the value of cash sitting in low interest paying accounts is being gradually eroded over time and doesn’t build wealth.   Investing is hands-down the best way to build wealth.  It beats inflation and there are many tax perks.  
      
      
      Please be aware that I am not a trained financial professional and I am not sponsored by any financial provider.  This content is purely for educational purposes. Please do your own research and seek out other resources and financial information before making any serious financial decisions.