Nobody can predict when a downturn will occur, and trying to time the market is risky. Say, for example, you sell your investments because you believe a crash is looming. There’s always a chance the market won’t actually crash and prices will continue increasing. In that case, you’ll miss out on those earnings by selling.
Say, also, that you decide to reinvest at a later time. If prices have continued increasing, you could end up paying more for your investments than what you sold them for. While selling during periods of volatility may seem smart, it could cost you a lot of money over time and make it harder to reach your retirement goals.
In addition, continuing to invest during market downturns can actually be a cost-effective strategy. When the market is in a slump, stock prices are lower. This is a fantastic opportunity to invest more when the market is essentially on sale. By loading up on 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’s 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 savings over the long run.