How easy is it to stay the course?

[Rimu05]

For some odd reason, ended up tracking back to 2008 on the boggle heads forum and as a millennial who hasn’t been in the market during a crash, I really started to wonder if it’s that easy to stay the course? Are the people here who rod out 2008 without touching their investments? Reading the forum then was like watching that YouTube video of an Iguana being chased by snakes.

How does one stay the course when their portfolio drops 50% and they are retired? Do you have cash stocked up in a savings account that should aid you in riding out market crashes?

[Omy]

We didn't sell stocks and we kept buying. We also purchased a short sale in 2010 that has appreciated significantly. We were not FIREd then (so that might have helped our confidence), but we are now. If 2008 happened next year, we would tighten our belts a bit and live off our rental income and cash reserves...and do our best to keep buying stocks when they were on sale.

[Monerexia]

Make sure you have twice as much as you need.

[ixtap]

If you keep stocks when they take a hit, there is a (fairly good) chance that they will go up again.

If you sell stocks when they take a hit, you have locked in your losses.

[Alternatepriorities]

I bought equities through the “great recession” as I had before and even skipped a trip to Europe in ‘08 to buy more... to be honest I’d probably feel better if we had one more good dip before we reach FI. It would make FI seem more secure if we were 2 years into a bull market instead of 10. But in my heart I know that’s just talking head nonsense. There is no meaningful difference between a 19.5 and a 20 percent drop. It’s just something they can write a headline about.

[PaulMaxime]

How does one stay the course when their portfolio drops 50% and they are retired? Do you have cash stocked up in a savings account that should aid you in riding out market crashes?

Well, you realize that every time in the past that the market has crashed, it has recovered and then gone on to new highs. Some people will just stop looking at their statements. Other more "advanced" folks will do everything they can to scrape up more cash to buy more investments as the market drops.

Last time (2008!)  I did a bit of both. I kept investing in my 401K to the max that I could, and sending a good chunk to my brokerage every month as normal, but I also didn't check my portfolio value very much. That crash ended up being a good thing for me.

As far as retirement, if you are familiar with safe withdrawal rate studies, they've tested every possible outcome and even with market crashes you can generally withdraw approximately 4% adjusted for inflation each year and have a great chance of your money lasting 30 years. Lots of safe withdrawal stuff on the MMM home page.

[FIRE 20/20]

You might want to check out this thread.
https://forum.mrmoneymustache.com/investor-alley/2008-crash-any-witnesses-who-didnt-adjust-investing/

[DoNorth]

Wasn't too hard.  I'm was 30 then so I had been working professionally for about 8 years and had NW in the high $100's.  I  invested a large bonus in July of 2009 I think and just left it there and have only made incremental investment allocations changes since then.  With that said, my employment was very secure.  I know several people who sold investments because they were at risk of losing jobs at the time.

[jeroly]

I FIREd in 2000. I had already experienced several  mini crashes before ‘08 which had tested my risk tolerance, was additionally prepared to do some paying gigs when necessary, and I had a good margin for error,  so I never really even considered selling my overall stock position. I did think about getting out of financials (held some VFH at the time which dropped over 50% IIRC) and emerging markets (held EZA).  In the end I didn’t sell those either  and they eventually recovered.

[mistymoney]

For some odd reason, ended up tracking back to 2008 on the boggle heads forum and as a millennial who hasn’t been in the market during a crash, I really started to wonder if it’s that easy to stay the course? Are the people here who rod out 2008 without touching their investments? Reading the forum then was like watching that YouTube video of an Iguana being chased by snakes.

How does one stay the course when their portfolio drops 50% and they are retired? Do you have cash stocked up in a savings account that should aid you in riding out market crashes?

I just stop looking and focus on other things in life. if I have extra money available, I through it in at the lower rates.

[Valhalla]

The greater the risk, the greater the reward.  If there was zero risk of crash, you'd be making less than inflation.

[MissNancyPryor]

I rode out 2000 and 2008 and never sold stock, never stopped investing the maximum, never took a loan from my investments.  There were also many panic drops along the way (various Asian flu, Brexit, Christmas Eve 2018) that were very uncomfortable but I never sold or stopped investing. 

I am FIREd now and have reduced my fixed expenses such that in a serious recession or even depression I could survive on 1% of my wealth.
       
Read JL Collins.  Tie yourself to the mast.  Don't jump off a rollercoaster.

[seemsright]

We have a plan. We invest X a month period. There is no what is the market doing, or other questions. We have a plan we stay on that plan.

There is no shinny thing that is going to reroute our money from our investments. We came out ahead after the '08 recovery time. At this point we find investing like brushing our teeth we just do it.

We also try in increase it as much as we can. Our goal is a FatFire once our DD graduates HS. We are on target.