Investing is Not Scary!

Halloween is a scary time for kids, with spooky jack-o-lanterns and skeletons adoring front doors and walkways. Spider webs and witches' costumes are pretty unsettling, too. But, as we grew older, learned more and experienced more, we discovered that there's nothing to be afraid of.

Investing is the same. It might seem scary at first, but the more we learn and know, the more we understand the stock market. History has shown that, over the long haul (10 years or more), there's nothing to be afraid of. Sure, there have been downturns - and some were very painful - but the stock market has rebounded.

The scary part is when you let fear get the best of you, and you bail out. When you're no longer invested, you've given away the opportunity to rebound, and you are no longer able to recoup any losses.

Take the four-year span starting in 2022, for instance. The S&P 500 Index's average annual return was negative 18.1% that year. That's right: you lost 18.1% of your money. If you had $50,000 invested in an S&P 500 index fund at the beginning of 2022, you were down $9,050 by year's end. A loss of over $9,000! Wow, that is scary!

But over the following three years, the S&P 500 Index was up 26.3%, 25% and 17.9%. Your initial balance of $50,000, which dropped to $40,950, grew over the next three years to $76,200.

That's a growth of 52.4%. Keep in mind that you would have realized that growth only if you had stayed invested through all four years, the good ones and the bad.

Stay invested for the long haul, and don't let goblins, witches and fear overrule common sense and the lessons of history.