Selling the Stock Market: 3 Reasons I’m Still Investing for Retirement

Last week was not a great one for stocks. And in light of the recent selloff, many people I know are worried about the impact on their retirement accounts.

I admit, curiosity got the better of me, so I also took a look at my retirement account to see what my balance looked like after the sale. And it wasn’t so pretty. But I’m sticking with my plan to invest in stocks for my retirement for these reasons.

Image source: Getty Images.

1. My retirement isn’t going to happen anytime soon

If I were a year or two away from retirement, a sale like this recent one would rattle me a lot more. Then again, if that were the case, I’d be less invested in stocks to begin with. But because I’m nowhere near retirement age, events like this are much less of a problem.

That doesn’t mean that I ENJOY seeing my 401(k) lose money. But I know that since I’m decades away from wanting to stop working, it’s time to get rid of this blip.

2. I’m confident the market will recover — because it always has

The stock market’s average annual return over the past 50 years is 10%, as measured by the performance of the S&P 500. But that doesn’t mean every year in the past 50 years has been great for stocks.

Many of us remember the Great Recession which took a toll on many people’s portfolios. Even somewhat recently, we all endured a short-lived bear market when stocks plunged in 2020 with the onset of the pandemic.

But when we look at the big picture, it’s clear that the stock market has a strong history of not only recovering from recessions, but also rewarding investors who stick with it. And there’s no reason to assume the same won’t happen this time.

3. I can take advantage of reduced stocks

It’s been a tough year to buy stocks because the market was doing so well until about a week ago. When sales occur, opportunities are created to buy shares at a lower price.

Now, I’ve never been a fan of timing the market to the day. What I mean by that is if you are trying to buy shares of a particular stock in them absolute lowest price, you might end up missing out on getting them at a more affordable level. But buying stocks after a sell-off is, to me, a reasonable approach.

If the stock was higher a few days before and is lower because of a broad market decline, this is not an indication of a problem with the company whose stock you are buying. Rather, it is a market reaction. In this situation, I am to take advantage of the discount.

Try to stay the course

I understand how discouraging it can be to look at your portfolio and see a much lower number on the screen after a sale. I understand because I have been in that boat many times myself as an investor.

Remember, though, that such things are normal when you put your retirement savings into stocks. And that doesn’t mean you should abandon your investment strategy when the market turns bad — even if it’s a pretty big one.