Investing can transform your life and set you on the path to financial freedom! It will also, inevitably, test your nerves. The past 50+ years, however, show that it’s much better to learn to tolerate the ups and downs of investing rather than reacting to them. The key to successfully dealing with our investment emotions is to have a set of simple, solid rules to guide our investment decisions. Beanstox makes it easy to do just that, offering a straightforward approach to help you invest with confidence and keep you on course toward your investment goals. Here’s what you should know:
1. Play the Long Game
Short term market trends can be distracting, but it’s important to look beyond the here and now. Historical patterns, like those of the S&P 500, show how strong the market has been over time, spending longer periods in rising markets than falling markets. The long bull market from March 2009 to February 2020, is a powerful reminder that patience during down markets has been rewarded!1 As of January 2024, the S&P 500 is at another record high, surging over 38% since October 2022.2 Given the average bull (up) market over the last 50 years, history suggests this upward trend could just be getting started. Check out the major difference between bull market and bear market returns below.
2. Make Investing a Habit
Beanstox encourages the simple yet powerful approach of investing regularly, no matter what the market is doing. This strategy, called dollar-cost averaging, means putting in the same amount of money at regular timeframes. It helps avoid the guesswork of trying to time the market perfectly. By investing this way, you might lower the average cost of your investments as time goes on, which can lead to better returns in the long run. Beanstox makes it easy for investing to be a regular habit. Just automate your recurring deposits in the app with the tap of a button. It’s all about steady, ongoing investing!
3. Keep a Cool Head
The ups and downs of the market can shake even the best of us. Beanstox makes it easy to avoid hasty decisions based on fear or excitement. You set your investment strategy with a clear mind, planning for the long haul rather than reacting to short-term changes. Beanstox keeps you on your predetermined path. You focus on what really matters—your long-term goals, not the market’s temporary shifts.
Let Beanstox guide you through investing’s emotional tug-of-war. By playing the long game, making investing a habit, and keeping a cool head, you’re well on your way to navigating the financial markets with confidence. Ready to begin?
Sources:
1. Bloomberg. S&P 500 Total Return Index. Data from 01/11/1973 – 01/31/2024.
2. YCharts. S&P 500 Total Return Index. Data from 10/12/2022 – 01/31/2024