No one can predict when a downturn will occur and it is risky to try to time the market. Let’s say you sell your investments, for example, because you think a crash is threatening. There is always a chance that the market will not actually go down and prices will continue to rise. In that case, you are missing out on these earnings by selling.
Also say that you decide to reinvest at a later date. If prices continue to rise, you may end up paying more for your investments than you sold them for. While selling during periods of volatility may seem smart, it can cost you a lot of money over time and make it harder to reach your retirement goals.
In addition, it can actually be a cost-effective strategy to continue investing during market downturns. When the market is in crisis, stock prices are lower. This is a great opportunity to invest more when the market is essentially for sale. By replenishing quality investments when their prices are lower, you can help your savings grow faster without breaking the bank.
If your goal is to retire a millionaire, it is important to have the right strategy. It may seem counterintuitive to continue investing, even when the market takes a turn for the worse. However, by investing consistently – even during periods of volatility – you can maximize your long-term savings.