Back To Blog

Don't Let the Stock Market Slide Lead to a Big Investing Mistake

3 Minute Read

Today, it’s the U.K.’s vote to leave the European Union. Last year, it was China’s stock market crash. Tomorrow, it will be some other global crisis.

But no matter how scary the headlines are, our stance stays the same: The only people who get hurt on a roller coaster are those who jump off.

Don’t forget you’re investing with a long-term outlook, and that means sticking with your investing plan whether stocks are up or down—or both in the same day!

color

Local experts you can trust.

Find an ELP

Don’t forget you’re investing with a long-term outlook, and that means sticking with your investing plan whether stocks are up or down—or both in the same day!

Investors are often their own worst enemy at times like this because they panic when the market drops. Instead of seizing the opportunity to buy stocks on sale, they dump their mutual funds to "keep from losing more money." We asked investing professionals about the impact emotional decision-making like this could have on your retirement savings.

The Battle Between the Ears

The professionals we spoke to agreed that investors let their emotions get the best of them in times of economic turmoil. "It’s hard to blame them when the media does such a great job of painting a gloom-and-doom picture all the time," Drew McMillin, an investing professional with Southwestern Investments Group, told us.

McMillin shared the story of a longtime client who was certain the economy was destined for a nose dive when the stock market wobbled a couple of years ago. Despite all the evidence the professional presented to convince the client to stick with his investments, the client insisted on cashing out.

"The trigger was emotional, certainly," Drew said. When the client finally realized his mistake and decided to reinvest his money, he had already missed a 13% increase in the S&P 500, and he had to pay a higher price to repurchase his investments.

As this investor learned, you can’t outsmart the stock market.

Forget the Past and Take Control

In 2008–2009, the U.S. stock market experienced one of the most severe declines in its history. If you were investing for retirement then, you might have made the exact same mistake as the investor above. Now, as the markets start swinging again, you’re faced with a choice. Will you repeat the mistakes of your past, or will you stick to your investing plan?

Will you repeat the mistakes of your past, or will you stick to your investing plan?

"We cannot go back and change time," Russell Kizer, an investing professional with RCM Capital Management, said. "But we can learn from our mistakes."

Russell said investors should focus on what they can control. The amount you invest, what you invest in, and how soon you begin investing are all factors you control. And these decisions have the power to impact your retirement savings much more than stock market performance can.

How to Win Over Your Harmful Investing Emotions

You can also take control of your emotions, and the good news is, you don’t have to do it on your own.

Need help finding an investing profressional? Use this free and easy way to locate an investing pro in your area!

Jump-Start Your Goals!

Jump-Start Your Goals!

Get our 8-Day JUMP START series and weekly newsletter that are packed with articles and tools to help you win with money.

Reach Your Money Goals

Reach Your Money Goals

Start with a budget. Join the millions already budgeting with EveryDollar!

Create My (FREE) Budget

Thank You!

Your 8-Day Jump Start is on its way to !

More from the Blog