Skip to site content
The Show

When The Going Gets Tough…

Money-Guy 08-12-2009

So here we find ourselves. I won’t go so far as to say that things feel good, but at least it doesn’t appear as though the sky is falling any longer. Will we remain at this “comfortable” level? I’m not sure and I don’t think that anyone knows for sure. What I do believe, however, is that we have made it through the worst of it. While I can’t be positive, I am inclined to suggest that the Dow will not (I say this with fingers crossed) slide back down to that dreadful 6500 level.

I had a meeting with one of my younger clients last week and I explained to him that I did feel we were through the worst part of this mess. Being a younger client, I had previously explained the specific benefits of Dollar Cost Averaging and, in addition to their employer sponsored retirement plans, began a periodic investment program for he and his wife. Thankfully, the two of them stayed disciplined and committed through all of the nastiness. Even through October, November, February, and March they continued with their periodic investment plan.

Now that the smoke has begun to clear, he explained that many of his friends had completely cut-off their monthly investments. He explained that they had reached a point where they basically couldn’t handle it anymore. In the investment world, we call this capitulation. He then asked me a great question. He said, “Brian, it was hard for my wife and I to stay the course, but we did. Is there any way you can show me how those specific investments have done over this crazy period in the market?”

I thought this was such a great question that Bo and I have decided to create a research document for the Premium section in which we show the benefit of staying the course through the worst of times. As you listen to the show I share some performance of periodic investments in a large cap growth mutual fund for a younger individual, a moderate balanced fund for an older individual, and then even a simplified asset allocation fund for a middle-of-the-road investor.

In the very darkest of times (the first part of March), investments made in September into each of the three funds explained above  were down 34.18%, 25.93%, and 29.31% respectively. If you weren’t investing over this period, try to take a step back and ask yourself how it would feel to know that an investment you had made no more than 6 months earlier had lost a third of its value. This is the point at which many people (the peers of my client) decided they were done with this whole stock market and investing thing.

But, for those educated and disciplined individuals like my client who stayed the course, they now have a chance to look back and see how beneficial that decision was. Periodic contributions made in March in the funds above have now returned 32.18%, 24.29%, and 46.31% respectively. Those are outstanding returns for a 5 month period!

“But Brian, you cherry-picked two days. It was bad for months! How did those individuals do over that whole time period when the sky was falling?”. That is a great question and I’m glad you asked! In just one year (from September 2008 to now), these three individuals on a periodic investing plan that stayed the course and didn’t try to time the markets have experienced an overall return of 11.11%, 8.4%, and 14.06%. If you ask me, I think those numbers speak for themselves as to whether it was a good idea to make that tough decision and, even when it wasn’t easy to do, stick to the original plan! As Dave Ramsey says, “Live like no one else so that you can live like no one else”.

Enjoy the Show?

Where You Can Watch and Listen:

Subscribe on these platforms or wherever you listen to podcasts for new episodes every Friday, live streams every Tuesday at 10am CT, and new highlight clips throughout the week.

Related Content

Free Resources

Financial Order of Operations®: Maximize Your Army of Dollar Bills!

Here are the 9 steps you’ve been waiting for Building wealth is simple when you know what to do and…

View Resource

Wealth Multiplier By Age

How much to save every month to become a millionaire.

View Resource

How Much Should You Save?

How much of your income can you replace in retirement? You can replace different portions of your income in retirement…

View Resource

Articles

Where Should You Invest? (A Beginner’s Guide to Investing in 2024)

, ,

Read More

What Is The Best Way To Buy A Home In An Expensive State?

, ,

Read More

Why Is Diversification Safer Despite 100% Stock Success?

, ,

Read More

Financial FAQs

Courses & Tools

How about more sense and more money?

Check for blindspots and shift into the financial fast-lane. Join a community of like minded Financial Mutants as we accelerate our wealth building process and have fun while doing it.

https://moneyguy.com/wp-content/uploads/2023/10/accent-icon-book.png

Millionaire Mission (Brian’s Book)

Buy Now
https://moneyguy.com/wp-content/uploads/2023/10/accent-icon-math.png

Know Your Number Course

Buy Now
https://moneyguy.com/wp-content/uploads/2023/10/accent-icon-pencil.png

The Money Guy Net Worth Tool

Buy Now

Recent Episodes

It's like finding some change in the couch cushions.

Watch or listen every week to learn and apply financial strategies to grow your wealth and live your best life.

LIVE ASK WifeWorkLonger

Should I Make My Wife Work Longer?

Watch Now
FULL HowToBecomeAMillionaire B

How to Become a Millionaire By Age (2024 Edition)

Watch Now
Laid off

I Just Got Laid Off! What Now?

Watch Now