Taking Advantage of Down Markets

Schedule a Meeting

I’ve been having a lot of conversations around market volatility here recently and how much the market has gone up and down.

Today I want to talk about a strategy for taking advantage of the market going up and down that may actually benefit you.

But first, let me ask you a question.

The question is, how do you as a 401k or 403b participant become a 401k superhero to your future self?

That is the question, and these videos will give you the answers. Hey, I’m Jonathon Schultheiss and welcome to the Becoming a 401k Superhero videos.

I’ve had multiple conversation recently about the market and even several people making the comment that they are stopping or reducing their contributions because the market has gone down.

That is exactly the opposite of what they should be doing.

Sounds crazy right. But let me explain.

Here’s the thing, we’ve all heard buy low and sell high, right?

When the market goes down that is your opportunity to buy low. If you stop contributions, you are missing the best buying opportunities.

Here is an example in a totally made up story.

My wife comes home from the mall and she says, "Honey, you’re not going to believe it, the mall is having a major sale on shoes."

As a guy, I’m thinking great we saved money on shoes, right?

But then she says, "No, I bought three pairs of shoes."

But what happens when the market is on sale?

We think that we need to stop buying and start selling.

So let me tell that story in the same way we think about the market.

So my wife comes home from the mall and says, "Honey, the mall is having a major sell on shoes. We have to have a yard sell and sell all of our shoes."

Doesn’t make sense, does it?

So why do we think that way when it comes to our investments when we should be buying extra shares?

Let me give you a powerful example of this.

Say you're putting $100 into your 401k plan and you are buying a mutual fund that trades for $25 a share so you are buying 4 share. 100 divided by 25.

Let’s say that mutual fund goes down to $20 a share and you keep putting that same $100 in.

Now you are buying 5 shares with that same $100.

If that mutual fund goes back to $25 dollars a share, guess what?

You just made $25 and the market never went up.

Now imagine that same example and you increasing your contribution and buying even more shares when it’s down.

You could make even more money when it comes back to even.

So here’s the thing, increasing your contribution and not stopping your contribution during market volatility is one of the best ways for you to become a 401k Superhero to your future self.

If I can help you with anything around your retirement plan, click on the link above and lets schedule a time to talk today.