Sunday, September 24, 2017

My New 10% Rule

I read an article that stated since 1950, the market has had 35 declines of 10% or more.  In all 35 instances, the market passed the previous highs.  Sometimes within a few weeks, other times a few months, and in a couple cases a few years.  But the recovery happened 100% of the time.  I would include a link to the article, but I can no longer find it.

Of course, the issue is timing.  If it takes 5 or 10 years to recover, it may be challenging for those who have no other source of income.  But if one has time, and other sources of income, it seems to be a no brainer decision to invest something

So from now on, when the market drops 10%, I will put some funds in an index ETF, such as the Vanguard Total Market ETF or the Schwab Broad Market ETF.   Of course, I will use funds that we won't need for at least 3-5 years, such as our children's savings/college accounts..

With all the geopolitical issues, I may get the opportunity to use this new rule sooner versus later.

Disclosure:  No compensation was received for this post.   At the time of the this post, we own shares of the Vanguard Total Market ETF and the Schwab Broad Market ETF.

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This is not financial or investing advice. Please consult a professional advisor.

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