A Market Point of View
How much Wealth will you potentially lose during your lifetime?
Keep a long-term perspective
While past performance is not a guarantee of future performance, the stock market itself has been resilient through the years. But good for whom? When assessed over long time periods, the market has had far more positive returns than negative ones. Rarely do any individuals or professionals ever equal or exceed market index performance. Even if you are close to retirement, remember that your time horizon is not the day you retire, it is the rest of your life. The odds are good the market will decline over 40% 14 times during your lifetime and 4-6 times during your retirement as well.
Expect the market & inflation to continually ebb & flow
The market will have ups & downs and that may be hard to handle emotionally but should not be the driving reason for making changes to your investment allocation. Because periods of volatility can and do occur for unknown and unpredictable lengths of time, your market portfolio should be prepared to suffer losses of large %'s of your portfolio. These peaks and valleys provoke Fear & Greed in 98% of investors. There is no guarantee you will ever recover your losses. It may be tempting to remain in a Money Market Fund but there is absolutely no insurance or guarantee. You could lose money in a Money Market Fund. You will always struggle at best to ever double your money while experiencing losses on a routine basis.
A Broker's Disclaimer
All investing without guarantees is subject to risk of loss. You might even lose 100% of your investment. Past performance is not guarantee of future performance.
Investors Diversification
You should never keep more than you can afford to lose in the stock market or any investment that is at risk. The market has declined every 7 years on average greater than 40% and that requires 3-5 years time and over 60% return just to break even. If it declines 50% it requires a 100% gain to recover. Losses don't equal Gains. If the market declines 25% and then recovers 25% the next year you have lost 8%. Another measure of the market performance is it goes down on average over 10% every 18 months on average. The older you get the less risk you should maintain.
Many wealthy people put less than 10% of their wealth in the market. Most people that are not wealthy keep close to 100% of their assets in the market trying to become wealthy. 2% are successful. Wise people invest in guarantees.