I like Walter Updegrave’s Ask The Expert column on CNN Money. His advice generally makes a lot of sense.
In March he got a question from a 28 year old with Roth IRA money in a 2045 target date retirement fund. The reader’s account had been pummeled over the previous couple months and he/she asked whether he/she should do something different or just “suck it up” and keep investing (you can’t tell the reader’s gender from the column, unless “A.P.” is a non-gender neutral name that I’m not aware of).
Updegrave advised the reader that he/she shouldn’t “suck it up” because sucking it up is for sports not investing. Then he used his next 828 words to give advice that can only be summed up as “suck it up.”
I’d like to add one important point to Updegrave’s advice. There is no reason for the reader to be concerned about the ups and downs of a Roth IRA that is 30 years from its first withdrawal.
In fact, the best thing that could happen to the reader is a stock market crash for the next 25 years, followed by a drastic upward climb just before he/she withdraws money from the account as the market takes up the slack of 25 years of under-performance.
Why would that be better? Because the reader would invest at attractive prices during the 25 years. He/she would be worse off if the market steadily climbs during the 25 years.
It’s the same reason why I’m not bothered with the market’s awful performance the last few weeks. After yet another horrible day today, it was announced the Dow is in recession territory at 10% below its all-time high from nine months ago.
Music to my ears. Every other long-term investor with a 5 year or longer investing horizon should be happy too.
I just wish I had more money to throw in.