How to Survive the Roller Coaster Economy
from daveramsey.com on 21 Aug 2009
By Dave Ramsey
I know that the recent media coverage about the economy
scares investors. The smartest thing you can do right now
is hold on to your investments. Do not cash them out.
That's what I'm doing. I have a lot of money
invested in the American economy through growth stock mutual
funds. But you know what? I'm not touching those funds. I'm riding this market roller coaster to the very
Well, people who make money in the stock market are the
ones who think long-term and don't jump in and out based
on the market fluctuations. Market timing is
trying to predict when to add or withdraw your money in
the market; historically, it doesn't work. After all,
the only way to get hurt on a roller coaster is to jump
However, staying invested ensures that my investments won't
miss those best-performing days. And guess what:
if you missed just 10 of the stock market's best-performing
days over the past 20 years, you would have lost tens of
thousands of dollars!
I honestly believe that 10 years from today, you'll
look like a genius if you hold on to your current mutual
But Dave, I'm almost old enough to retire.
Should I cash out?
Nope. I understand you're scared, but think this
through. If you're under 59 and a half years old and
cash out your 401(k), you're going to face penalties
and pay Uncle Sam a lot of tax!
When it's all said and done, you'll take
a bigger hit on your money by cashing out than any drop
in the stock market cause. So, even if you want to retire,
you're better off leaving your 401(k) or IRA alone.
Keep thinking long term. That's what I'm doing.
I'm not cashing out. I believe the market and my mutual
funds will be okay.
And 10 years from now, it will have been a great decision.
trustworthy investment advice from a professional I recommend.