With the DOW down about a gazillion points, it is easy to become discouraged. However, there is something to take heart in. Take a look at this graph from Harvard Bussiness Online:
If you go to the link above, it is an interactive chart. However, I just took a screen shot to show something. If you look, you will notice that every downturn is small and short followed by long periods of growth. Yes, this economy is bad at the moment. However, it is not the end of the world. We will see another period of growth soon.
What these short periods of recessions tell us is that we need to be prepared. Clearly screaming at us that an emergency fund is needed. As well as being diversified with our investments. As you get closer to retirement age, you should be moving away from stocks. All too often we get complacent in the periods of prosperity, only to panic at any hiccup. Plan ahead and you will be just fine.
-Kevin
2 Comments
I would even venture to say that if you have the means, this would be a good time to increase your savings – deductions for 401ks, for example.
Great idea. I nkow I have seen that Trent at The Simple Dollar say he maxed out his 401k contribution. The markets are down quit a bit, but history shows they will come back. Thanks for visiting.