From Here to Financial Happiness

Day Sixty Six Coping with Crazy Markets

Buying stocks and stock funds is easy. Staying invested is the struggle. We may be managing money for a retirement that is decades away – and that might last two or three decades beyond that – and yet most of us pay close attention to the stock market's daily performance, especially at times of market turmoil. The danger: We get so unnerved by a market downturn that we end up selling at the worst possible time.

With any luck, you'll grow more comfortable with the stock market over time. But these three strategies may help:

• See the silver lining. If the market drops, that'll hurt the value of your existing investments. But if you are regularly adding fresh savings to your portfolio, you're also benefiting from the decline, because your next investment will buy shares at cheaper prices. Indeed, if you're in your twenties or thirties, the current value of your portfolio is probably modest compared to the dollars you'll invest in the decades ahead.
• Focus on all your assets. Even if a market decline knocks 20% or 30% off the value of your stock portfolio, it's unlikely your total wealth has declined that much. After all, you might have money in bonds and bank accounts, a home that you own, your future Social Security benefit, any pension you're entitled to, and – maybe most important – your human capital, all of which remain as valuable as ever.
• Remember that stocks have fundamental value. At times of market turmoil, shares can seem like ...