It’s tough to have this convo when the clear cause to this market downturn is an apparently unprovoked war that has little American support and is already costing hundreds of lives. But atrocities of war aside, it’s not fun to log in to your investment accounts and see a significantly smaller number than you did a month ago. I’m even starting to hear some chatter about people FREAKING OUT over their retirement.

But here’s the reality about investing. Drops in the market are PART OF THE DEAL. If you don’t want to see your balance (temporarily) go down, they have an option for that. It’s called a savings account. These days a high yield savings account is paying about 3.5%, which roughly keeps up with inflation. That means, after the cost of inflation, your money isn’t growing at all.

Meanwhile, the stock market has historically has a “real” return (after inflation) of around 7%. The impact of 0% real growth vs 7% growth is massive. For example, if you invest $500/month over 40 years, here’s what you’ll end up with at those two rates:

0% return: $240,000
7% return: $1,197,810

That MILLION bucks doesn’t come without a tradeoff though. The tradeoff is you’re signing up for VOLATILITY along the way. Want the higher return? You gotta be cool with the bumps and be willing to ride them out. Don’t like the bumps? You get the lower return.

We’re currently about 9% lower than all time highs. In the past when the market goes down 9%, here’s what happened next: Sometimes it goes down, sometimes it goes up. We simply don’t know if 9% is the bottom or if it’s the beginning of a 20% crash. And if we get to 20% we won’t know then if THAT’s the bottom or it will go down 30%. You don’t know, I don’t know, no one does.

But here’s what I do know: The market will recover and get back to all time highs again. I promise you. We’ll get through this just like every crash before. Keep investing early and often, be grateful for getting more shares for less money during this time. Stay the course.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy