My Investment Portfolio Is Down 30% — Here’s Why I’m Not Worried | Personal-finance
If you would’ve told me one year ago that I’d be looking at a massive loss in my portfolio by June of 2022, I wouldn’t have believed you. At this point last year, tech stocks were still flying high and my investments were doing well.
But the recent tech sell-off definitely took a toll on my portfolio. And even though I’m fairly diversified, because the broad market has been hit hard, my portfolio is down roughly 30% year to date.
Clearly, that’s not a negligible decline. And I won’t pretend that I haven’t had my moments of being bothered by that reality.
Image source: Getty Images.
At the same time, though, I can’t say I’m losing sleep over the fact that my portfolio is down. Here’s why.
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1. I’m in it for the long haul
Some investors have a goal of buying stocks and selling them for a quick profit. That’s not my game plan.
Rather, the investments I’ve acquired are earmarked for retirement savings and other long-term goals that are decades away. Because I don’t plan to tap my portfolio anytime soon, I won’t be taking actual losses. Rather, I’ll simply be looking at losses on screen. There’s a big difference.
2. My portfolio doesn’t serve as a source of cash
Some people tap their portfolios regularly to access money when they need it, whether by liquidating positions or cashing out dividend payments. But that’s not a practice I uphold. Instead, I live below my means so that my paycheck (or even a reduced paycheck) covers all of my essential expenses and even my non-essential costs.
I also maintain a large emergency fund — one with enough money to cover a year’s worth of bills. Tying up that amount of cash in the bank means limiting myself to minimal interest, which is a definite bummer. But it also means that if I were to lose my job today and see my income slashed, I wouldn’t have to run to cash out investments to drum up money to pay my bills.
3. I expect the market to recover
The stock market has a long history of recovering from downturns. And there’s no reason to believe this round will have a different outcome. In fact, some of the stock market’s strongest periods have emerged in the wake of bear markets, so I’m not looking at this as a hopeless situation by any means.
It’s all about keeping things in perspective
Let’s be clear — I’m not thrilled with the fact that I’m looking at a 30% loss in my portfolio. And I also, in hindsight, realize that I may have been too heavily invested in a single market segment (tech) for my own good. That’s not something I can go back and change, but it is something I can learn from.
But either way, that 30% loss is really just a potential one, not an actual one. Keeping that distinction in mind is helping me navigate this tricky downturn and avoid worrying to an unhealthy degree.
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