Investing is undoubtedly a long-term endeavor. Seeing immediate returns is uncommon, which can lead to feelings of disappointment. The recent underperformance of markets can cause some individuals to question their financial strategies. Nevertheless, if you manage to remain motivated over time, you can achieve your objectives, whether it’s planning for a comfortable retirement or gaining financial independence by a certain age. Investing remains a prime method of building wealth and establishing financial security in the future.
Staying focused on your plan is critical. But you may wonder how to do this when markets dip and it seems your investments are stagnating. Below are some useful tips to maintain activity and motivation in your investments, irrespective of their current performance.
TREAT IT AS A SALE
It’s no secret that the stock market has been low recently, with a significant decline in the market, and perhaps your investments have suffered losses too. So, why should you stay motivated and continue to invest? I’ll explain more in the following point, but consider it as buying commodities on sale with each contribution to your retirement or trading account.
Consider this analogy: I particularly enjoy Honeycrisp apples for their perfect blend of sweetness and tartness, but they can be pricey, just like others who enjoy these apples. Would you rather purchase a bag of Honeycrisp apples at their peak price of around $7 to $9? Alternatively, you could buy them during a sale for $4 or $5. Most people prefer to buy things on sale, and the principle is the same when the stock market decreases.
When the market flourishes, shares are sold at their highest price. But when the market declines, you can still purchase stock shares at a significant discount. Whenever the market recovers, you’ll benefit from more growth.
REMEMBER THAT THE MARKET ALWAYS BOUNCES BACK
It was a few years ago when I came across a book named The Simple Path To Wealth that offered a life-changing perspective. It suggests that the stock market will always recover eventually. While some years could witness a slump or market correction, long-term trends show a consistent rise. Therefore, maintaining motivation to continue investing is crucial.
Notably, the 2008 recession led many investors to believe in a permanent downfall and hence, they disposed of their investments. However, as history has shown us, the market surprisingly recovered, repeating past patterns of regaining strength post declines.
Investing for an extended period of, let’s say, 40 to 50 years, makes any downfall of one or two years appears like a minor hiccup.
CONTINUE LEARNING
To stay enthusiastic while investing, commit to learning more about the market, portfolios, and the wider world of finance. Instead of worrying about the status of your investments or getting swayed by news reports, concentrate on understanding the facts.
Immerse yourself in knowledge and develop your skills and understanding of investing by reading a book, enrolling in a class, or using an online platform. Recognize and clarify terms like ‘Bear Market’ (the current scenario) versus ‘Bull Market’ (the recent years of substantial market growth).
Your brokerage might offer complimentary webinars or instructional resources to help clarify your queries and add to your knowledge about investing. The more you learn, the more confident and motivated you’ll become in making investment decisions.
PICTURE YOUR FUTURE
You undoubtedly have a goal in mind for your investments. Take a moment to recall your ultimate aim and how investing can assist in achieving it. Imagine your future lifestyle; do you see yourself owning multiple properties or traveling frequently upon achieving financial independence?
Contemplate what an average day in retirement might entail – reading, hiking, volunteer work? Envisioning your future life can redirect your focus back to your initial reasons for investing. While emotions may be a poor guide in decision-making, your root cause for investing can provide an empowering emotional aspiration to solidify your financial future.
IN CONCLUSION
Demotivation can sometimes creep in when making regular 401(k) contributions feels like a sacrifice or when you experience continued market decline. However, maintaining motivation while investing is essential.
Investing is a marathon, not a sprint. There will be highs and lows, but typically, the long-term rewards are well worth the journey. Today’s contributions could be envisioned as seeds planted for a future prosperous harvest.
