Financial Planning Fridays #143: What Are We So Afraid Of?

Hi friends, Mark Twain said, 'I've had a lot of worries in my life, most of which never happened.' I know I am the same way. My biggest fears are always worse in my imagination than in actual life, and I have overcome some pretty big obstacles. It is the same in investing. Our fear of a market crash is usually much worse than the actual impact it has on our life. However, this fear is so great for many people that they unfortunately avoid all investments in stock.

This fantastic chart shows the impact that good and bad markets have had since 1950. The enormous mountains that you see, those are the good markets; they have had an average gain of 192%. The relatively tiny valleys are those big, scary market crashes that we are all so worried about; they have only averaged a 35% temporary loss.

A big part of our mission at Presilium is to help you feel comfortable enough during the downturns that you stay invested and are rewarded with the next big market gain. I am much more frightened of the idea of our clients missing out on the next big move up than I am of enduring a temporary market decline that will have little to no impact on our clients' long-term financial success. Thank you, and I look forward to talking with you next Friday morning.