If you’ve ever rode a horse, you know that things don’t always go as planned. One minute, you may be enjoying an easy-going ride and the next, your trusty steed spooks and takes you for an uncontrollable, rough ride full of ups, downs, twists, and turns. Even the most well trained, consistent performing animal can still be unpredictable. Investing is not all that different from riding a horse. You’re going to have periods of smooth, consistent performance and hopefully many rides that will exceed your expectations. But there is also a good chance you’ll face difficult times where you want to hang up your spurs and sell your saddle. If you want to be a cowboy – or in this case be a smart investor – you have to learn to take the good with the bad and ride through those rough times. Here’s a real-life example for you. Let’s say that on January 1, 2020, you had $100,000 invested in the stock market and then COVID happened and caused the market to decrease by nearly 20% in 3 short months. Your new balance at that time would have been $80,400. If you panicked and took your money out on March 31, 2020, you would have missed the 47.3% increase in the market over the next 9 months that could have resulted in a balance of $118,429 at year end – a difference of $38,029! Trying to predict the market without a crystal ball is difficult and focusing on short-term market performance takes your sights away from your long-term financial goals. Market volatility is completely normal, and you are going to have to fight through some rough rides to earn the best rides of your life. So saddle up, buttercup.
