Bear Market Means Stock Market Discounts

I you’re a young investor, with decades before you’ll need the assets in your retirement portfolio, this bear market should make you happy. While it’s difficult to swallow the losses your retirement account has made, think of it as a 20% discount on what you’ll be buying over the next few years rather than a 20% loss of the assets in your retirement account.

Since the high in the market last October, my retirement accounts have lost thousands if not tens of thousands. It’s hurt. But, I’m only 27, nearly 28, and with another forty years of retirement saving left in me it’s actually a positive that the market has gone down. As much money as I may have in my retirement assets now, I doubt I’ve even contributed 10% of what I will eventually contribute towards retirement. The 20% discount young investors are now getting, which will benefit the 90% of retirement savings we have yet to do, outweighs the 20% loss we’ve experienced on the 10% we have contributed.

It wasn’t until today that I full appreciated what all those investment magazines and books had said. A broad market decline is good for young investors, bad for poorly diversified older investors nearing retirement, and now I actually believe it.

How will this change my behavior? It won’t. I still make my regularly scheduled contributions, though rebalancing will be a little more active the next time we look at it.