Why should I stay in the market when it is losing money?

Your retirement plan is designed for long-term growth. The following are examples of why you should leave your money in the market:

Stock Market Correction 1987:
An investor, with $10,000 in the market at the beginning of the year, saw the value decline to $7,000 in October of that year. Two years later the value was $9,000 for the investor who panicked and pulled out of the market. In the same two-year period the value climbed to $11,500 for the investor who left the money in the market.

Of the last seven stock market corrections since 1929, it took the investor an average of 17 ½ years to see a return on his/her money if the investments were taken out of the market. If the investments were left in market it took the investor an average of 3 ½ years to see a return on that same money.

What does the number 43,800 represent?

A. Three meals a day for two people for 20 years. At $5 per meal, ($2.50 per person) a retired couple will need $219,000 to stay fed.

Most people who retire at 65 can expect to live another twenty years. It is essential that your investment goals do not stop at retirement age. 1) Think about how much you want to have saved in the next 5, 10 or 15 years. 2) Periodically re-budget to see if you can put more money into your retirement plan. 3) What percentage of return do you need to meet your retirement goals? Can you accept a bumpy ride in exchange for long- term returns in the more aggressive funds? Alternatively would you rather have lower long-term returns in exchange for a smoother ride in the less aggressive bond and money market funds?
Source: 401(k) Alert Vol. 2, No. 4: October 1999

Would you pay $250,000 for a pizza?
If a 30 year old were to invest $20/week (approximate cost of a pizza) into a mutual fund, that person could have a nest egg of $250,000 by age 65.
Source: Allyson Lewis, The Million-Dollar Car and $250,000 Pizza

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