Its easy when you have a plan. Its easy when the stock market has rallied 20% to start the year. However its a lot harder to have conviction in something when you are seeing it struggle to make new highs and continues to trade in a range. During this period of time you may see your account stay stagnant even though you are constantly throwing money into your brokerage. Im here to tell you thats ok.
It will happen. Some years will be better than others. During those bad years it helps when you understand that even if the balances are on your accounts are not moving your still progressing. You are actively buying more shares of your favorite companies and ETF’s and buying more and more income for your future self. During these stages called accumulation your dollars are buying more shares for cheaper prices. The one thing you need to do is have patience.
The next bull market is always around the corner. You wont know when it will go up or how long the market will go down. Understand the markets although not predictable are very cyclical so understanding this one simple concept can keep you from making a huge mistake. That mistake being selling out of your positions during a bear market when shouldn’t have.
Im not saying to never sell. What I am saying is don’t cut your self short during your early years jumping in and out of stocks. What you will end up doing is cutting off the life cycle of your investing journey by destroying the effects of compound interest. This could be your greatest downfall especially early in your investing journey.
Compound interest is the life blood of seeing your investments grow into life changing wealth over the course of 10, 20, 30 years. Its underestimated how a simple 7% annual return with a dividend growth rate of 9-10% can grow into passive income that would rival your favorite youtube channels monthly income. So I write all of this to say stay invested, stay consistent and stay patient because the results of not doing so you will not be able to afford.