#repost
How long do corrections last? 🤔
This was one of my first posts back in September and I think it is far more relevant now than it was then. Hope yall find value in it. I made some adjustments in verbiage to reflect where are today.
I think this is something important to know and be prepared for as a long term investor. A correction is defined as a 10% or more drop in one of the major indexes such as the S&P 500. At the time of posting, we are officially in a correction (not a crash) As $SPY has dropped just over 10% from all time highs.
What happens if you buy at the top of the market and immediately the market enters a correction? If you never bought again, it would take 4 months to recover. If you kept buying as normal and DCA your exchange traded funds (ETFs) $SPY $VOO $VTI etc… every week, you would actually recover much quicker.
Bear markets are obviously a different story. We’ve had only 12 since WWII. They are defined by a 20% or more drop from recent highs. They can take between 14-24 months to recover. Nothing I personally look forward to. But again this is considering you never bought again.
And lastly, a crash is a drop of over 30% in a broad market index.
How often do these occur? ⁉️
😨A correction averages once every two years.
😢A bear market averages once every 4 years.
😭A crash averages a once every six years.
If you are investing for retirement and have 20-40 years left, these are statistics that are important to know because you will experience a combination of these before you retire.
So while none of this is great news and I do not recommend blindly throwing money around… I’m taking the time to remind myself a few things. corrections are normal and inevitable. they keep the stock market from overheating.
my goals:
🌟I am going to keep buying $VOO every Friday no matter how much it keeps dropping
🌟I am going to wait patiently for opportunities and make sure to take them, but I am not going to panic buy or sell.
🌟 I am going to take the time to learn something new every week
🌟 I am going to keep myself engaged with the Public community. It’s so much easier to keep level headed with a community like this that will reassure you when your emotions cloud your investing.
🌟I turned off my price alert notifications and I’m going to close the app if I feel tempted by fear. Emotional discipline.
🌟 Keep money in savings incase this correction turns into a “crash”.
The last thing I want to do is be presented with the golden opportunity to buy into the lows of the market and not have any savings to take advantage of it. #longterminvesting #DCA #buyandhold #marketcorrection #bearmarket #marketcrash
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