Taking recent market volatility in stride
The market has been volatile the last two weeks, and this can be unsettling for investors. You might think, Will the market go back up? Should I take action? We're here to reassure you that volatility is normal and to explain why staying focused on your long-term investment goals may be the best approach.
Historically, the overall market has continued to rise
It’s normal for the stock market to have highs and lows -- it can’t rise without ever falling. In fact, our partners at Wealth Technologies Inc. (WTI) believe that the stock market may have been due for this recent drop after its long stretch of steady gains and minimal volatility: "Any long streak of winning markets has to end sometime. And the lower the volatility in the markets has gotten, the more sudden it feels when it wakes up." But WTI doesn’t think this current increase in volatility is a sign of higher risk: "This does not by itself point to any lasting risk conditions."
One thing is clear: When we look at market highs and lows historically, the overall market has always continued to rise over the long haul. Staying invested through the lows is a good way to ensure you realize gains when the market starts increasing again. In other words, when the market drops, consider your broader investment goals carefully before deciding to withdraw your investment entirely.
Sticking with your investment plan may pay off
If you’re investing for the long term like our MoneyLion Plus members are, we recommend approaching short-term volatility with patience and staying invested. If you withdraw your investment when the market is down, you may miss out on gains when it goes back up, and you may have to pay a higher price just to get back into the same investments you sold.
Our MoneyLion Plus members are on the right track
As a MoneyLion Plus member, you’re invested in a diversified portfolio, which means that your portfolio is managed in a thoughtful way to help minimize the impact of large market swings. And, because you continue to invest $50 or more every month, even during market downturns, you can reap the benefits of “dollar-cost averaging.” Dollar-cost averaging means that if you keep investing the same amount during both down and up markets, you end up paying the average price of an investment over time, which can help you achieve better investment returns in the long run.
Furthermore, staying invested allows you to continue earning compound interest, helping your investment grow bigger over time.
The market has always recovered and gained new ground in the long run
For MoneyLion Plus members, and most other investors, investing is about the long game, so don’t get too caught up in the day-to-day, week-to-week, and month-to-month market cycles. Benefitting from investments typically requires a long-term view and patience. While we recognize that volatility can be stressful, the market has always recovered and gained new ground in the long run.
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