The Market Goes Down and I Get Rich

The stock market had yet another slight downturn over the past couple of days. But my portfolio went up in value by nearly $200. What is the secret of gaining money when the market goes down? Regular Contributions!

Last week I made an additional $200 contribution to my Roth IRA account. So while the market downturn caused my portfolio to decrease slightly, the net effect of the contribution was that my portfolio was up by just under $200.

One of the simplest strategies for ensuring that your portfolio retains its value in times of economic unrest is to keep on contributing to your accounts even when the market is taking a nosedive. This takes a certain amount of faith on the part of the investor. But if one is confident (as I am) that any market downturn will eventually be corrected in the future, then not only will your account ride the stock market waves a little better, but you will also have significantly more money when the market does go up from buying your security shares at a lower price.

A friend of mine observed a while back that my account seems to weather the storms a little better than others and does not seem to suffer any heavy losses. Making regular contributions to my account is probably the single most important factor in keeping my account at an ever-increasing value. So if you find yourself getting squeamish about investing during hard economic times, check that attitude and make use of the downturn to buy low and sell high (in the long-term).

As my retirement accounts increase in value, my ability to prevent a negative dip in my accounts' net value will be hindered by increasingly wide fluctuations. But the beauty of regular contributions is that the high points in the cycle will be increasingly higher and higher as I continue to make contributions through the ebbs and flows of the stock market.

2 comments:

Anonymous said...

Can you get rich starting with no money?

Anonymous said...

You cannot get rich with no money, but you can get rich with just a little - invested consistantly over a long period of time. Interest rates are awful these days so you may be better off getting out from under consumer debt first (since paying 11% on CC and getting 3% on savings is not the right ratio).

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