{"id":117031,"date":"2025-03-07T04:49:09","date_gmt":"2025-03-07T04:49:09","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/a-few-reminders-to-myself-when-investing-in-uncertain-times\/"},"modified":"2025-03-07T04:49:09","modified_gmt":"2025-03-07T04:49:09","slug":"a-few-reminders-to-myself-when-investing-in-uncertain-times","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=117031","title":{"rendered":"A Few Reminders To Myself When Investing In Uncertain Times"},"content":{"rendered":"


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Over the past several years, my portfolio has grown considerably through a combination of good returns plus regular savings and contributions. These days, I\u2019m comfortably in the Coast FI<\/a> stage of my financial independence journey, where my portfolio is large enough that it should grow enough to cover my expenses at traditional retirement age, even if I don\u2019t save another penny again (note that while I am at Coast FI, I\u2019m still saving and investing \u2013 but being at Coast FI puts a lot less pressure on our household when it comes to saving and investing).<\/p>\n

Having a large portfolio is undoubtedly a great thing, but it does create some surprising mental considerations that I never thought about when I was working with far less money. As a bit of background, I started my investing journey about 10 years ago. Those ten years have seen a big upward trend in the market, but it did come with some periods of volatility and flat growth. We had a bit of a flattening right around when I started investing, then that big pandemic drop in 2020, and then some periods of flat growth in 2022 and 2023. From the looks of it, we might be entering another dip (or worse).<\/p>\n

We all know that investing is about thinking long-term and staying the course. When I started investing, my portfolio was small, and even when things got a bit volatile at the beginning of my investing journey, it didn\u2019t feel like that big of a deal. Things went up and down, but the money I was working with wasn\u2019t that much in the grand scheme of things. But I\u2019ve noticed now that as my portfolio has grown, these natural market fluctuations can look and feel a lot worse to me. And that forces me to have to really remind myself what investing is all about.<\/p>\n

The Problem With A Larger Portfolio<\/h2>\n

Much of investing is a mental thing- where you have to either stop looking at your numbers all the time or be comfortable when you see things drop. I try not to actively check my investments all the time, but I have my investment accounts logged into the financial tracking app I use, so inevitably, I do see the market fluctuations that happen with my investments (I use a paid app called Monarch<\/a>, which is what I switched to after Mint shut down). From a mental point of view, I\u2019m always telling myself that I\u2019ve picked a reasonable asset allocation, that I don\u2019t need the money now, and that I believe that the market will go up over the long term.\u00a0<\/p>\n

But I\u2019m also human, and seeing the value of my investments drop does hurt. Interestingly, as my portfolio has gotten larger, seeing my portfolio drop seems to hurt even more. With less money, the drops can be severe, but from an absolute number perspective, it never felt like that much. But I\u2019ve noticed that as my portfolio has gotten bigger, some of these market drops can be huge from a pure numbers standpoint. Whenever the next big market correction happens, my portfolio could drop by six figures. People with really huge portfolios can see even larger drops from a pure numbers standpoint. No matter who are you, that can be hard to stomach.<\/p>\n

So, with all the uncertainty out there about what\u2019s happening with the market, I\u2019m writing this post as a reminder to myself about what this investing thing is all about.<\/p>\n

Five Things To Remind Myself About My Investments<\/h2>\n

1. I Don\u2019t Need This Money Soon<\/h3>\n

Perhaps the most important thing I remind myself of when the market starts to get choppy is that I do not need this money anytime soon. I\u2019m not on the early retirement path at the moment \u2013 these days, the plan is to go the traditional route, which means I\u2019m likely not going to need any of this money for two decades or more.<\/p>\n

Since I don\u2019t need this money anytime soon, worrying about market fluctuations or second-guessing my asset allocation isn\u2019t helpful. All the money in my investment accounts \u2013 gains or losses \u2013 is only on paper. That\u2019s not to say market fluctuations don\u2019t have a meaningful impact on my real life. The stock market often correlates with the general health of the economy, so if the market drops, it\u2019ll likely impact my income too. But income and the health of the economy is something separate from my investments.<\/p>\n

All this to say, it\u2019s one thing if I needed this money soon \u2013 in that situation, I\u2019d rightfully be worried about what the market is doing. But with literally decades of investing time left before I even need to think about this money, there\u2019s really no use fretting about things now.<\/p>\n

2. My Investments Are Good Enough<\/h3>\n

One of the most important concepts to understand about investing is that what you\u2019re invested in doesn\u2019t have to be perfect \u2013 it only needs to be good enough. It\u2019d be great if we could make a perfect portfolio of investments, but unless you can see the future, there\u2019s no way anyone can know which portfolio is going to be the perfect one.<\/p>\n

That being said, go to any investing forum and you\u2019re going to see people arguing about all sorts of minutiae of what makes a good portfolio. It\u2019s fine to argue about what you think is better, but I think that people often lose the point when they do this \u2013 that even if your portfolio isn\u2019t the \u201cperfect\u201d one, assuming you\u2019ve picked a good enough portfolio, you\u2019ll probably be fine too.\u00a0<\/p>\n

What exactly makes a portfolio good enough? Good enough means your investments are reasonable and will likely get you to the finish line (in this case, the finish line means financial independence). It doesn\u2019t mean you\u2019ve picked the best portfolio possible. It could even be the worst portfolio when compared to other good enough portfolios. But as long as it gets you to where you need to be, that\u2019s all you need.<\/p>\n

I\u2019m currently doing the JL Collins route of 100% in VTSAX<\/a> in my Vanguard accounts and similar Total US Stock Market Index funds with my non-Vanguard accounts (specifically, with my Fidelity Solo 401k<\/a> and Fidelity HSA<\/a>, I\u2019m invested in FSKAX<\/a> and FZROX<\/a> respectively). I chose this allocation because it was the simplest one when I first started investing and the arguments behind it made sense to me. I\u2019ve seen tons of things saying that having an international allocation will do better and that it\u2019s the safer bet in the long run. That very well may be true, but no one really knows.<\/p>\n

At a minimum though, I am fairly certain that going with a Total US Stock Market Index Fund, even if not the best choice, is likely going to be good enough. And that\u2019s all I need.<\/p>\n

3. My Contributions Help Steady Any Downturns<\/h3>\n

The nice thing about long-term investing is that, so long as you stay the course, you\u2019ll keep investing through all the ups and downs of the market. We often think of investing as a beginning number that moves up and down, but in fact, there are two things in play when you invest. There\u2019s the value of your investments thanks to market movements, but there\u2019s also the value of your investments through your contributions.<\/p>\n

There\u2019s a big psychological benefit here that often gets overlooked when you\u2019re still in the investing stage of your wealth-building life. That\u2019s that even if things take a dip, so long as we continue to invest, those dips won\u2019t feel as bad. This is especially true if you\u2019re someone who is saving aggressively because even if your investment account value drops, you\u2019re still building it up with your contributions. Depending on how big your portfolio is, you might even replace all of your losses with your contributions.<\/p>\n

This is exactly what happened in the early days of my investing life. I started investing in a sort of flat period in the stock market. And while it didn\u2019t feel great to see my investment return staying flat (and being negative at some points), the actual pain wasn\u2019t so bad because I was continuing to put more money into my account each month. As a result, I never really felt like my investments had dipped much because any losses were always being replaced by new contributions.<\/p>\n

With a larger portfolio, it\u2019s a bit harder to replace any huge losses, but even so, I\u2019m continuing to save fairly large amounts, which means any drops in the market are slightly softened with continued contributions (one downside though is that because I\u2019m self-employed, I do my contributions once per year, so I do feel the dips in the market a bit more than when I had a traditional job where I was investing with each paycheck).\u00a0<\/p>\n

4. I\u2019m Dollar Cost Averaging By Necessity<\/h3>\n

This brings me to another point about investing over long periods. There\u2019s often a fear that we\u2019ll invest at the top of the market and then instantly see our investments crash the next day. There\u2019s no doubt seeing this happen might crush your spirits and cause you to panic. This is why one recommendation to help steady this fear is to dollar cost average your investments. This is where, rather than investing your money all at once, you spread out your investments over a period of time. The idea is that by dollar-cost-averaging, you\u2019ll limit the blow of any dips since you\u2019re going to be investing at different times. Sometimes you\u2019ll be buying when prices are high. Other times, you\u2019ll buy when prices are low.<\/p>\n

Here\u2019s something to realize \u2013 almost all of us dollar cost average simply out of necessity because very few of us suddenly have large sums of money to invest all at once. If you have a regular job, you\u2019re likely investing every few weeks as you receive your paychecks. Even if you\u2019re self-employed like me, you\u2019re probably making new contributions at least once per year.<\/p>\n

From a practical standpoint, what this means is that I know I\u2019ll never make my investments only at the worst time. There will be times when I\u2019m investing at better or worse points. But I\u2019ll never only invest at the top or bottom of the market.\u00a0<\/p>\n

5. I\u2019ve Gone Through Bad Periods Before<\/h3>\n

A final thing to note is that, while I have only been investing for about a decade, I have been through bad market periods in my life, and so far, things have always seemed to bounce back.<\/p>\n

I graduated college in 2009, right in the middle of the financial crisis. Of all the years you could graduate college in this century, 2009 was probably the very worst year. I couldn\u2019t get a job and ended up moving back home and getting a minimum-wage job. And yet, despite all that, I survived and am doing very well today. While I wasn\u2019t invested in the market at this time due to a lack of money and financial knowledge, I sure felt the impact of the financial crisis.\u00a0<\/p>\n

In March 2020, we had a global pandemic that we hadn\u2019t seen in a century. For a brief few months, VTSAX and other broad-market index funds dropped by over 25%. it was short-lived thankfully, but this was a period where it felt like the world was coming to an end. And yet, once again, we bounced back. Some people probably panicked and sold or adjusted their portfolios. I did not and kept on going.\u00a0<\/p>\n

And we\u2019ve had some flat periods over the past 10 years too \u2013 periods where people felt like a recession was probably coming and that the market couldn\u2019t keep going up. Through it all, I\u2019ve been able to stay the course.<\/p>\n

I don\u2019t know if I\u2019ll panic if we get another financial crisis. Maybe we won\u2019t get another one like what happened in 2008 and 2009. Maybe we will. But I do take comfort in knowing that I\u2019ve been through some downturns and a massive global pandemic \u2013 and I still was able to stay the course.<\/p>\n

Final Thoughts<\/h2>\n

Times are very uncertain right now. And whenever things take a big dip, it\u2019s going to hurt to see my portfolio value drop by five or six figures. Some of you reading this might be in a similar position to me.<\/p>\n

Remember that so long as you\u2019ve picked a good enough portfolio allocation, don\u2019t need the money anytime soon, and can mentally keep yourself from panicking, you\u2019ll likely be fine. That\u2019s something I have to keep reminding myself all the time.<\/p>\n

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