This market drop was probably the best thing to happen for these younger investors. There are numerous threads of them cashing out, calling for the end of the world and I damn near crapped my pants seeing a thread on someone wanting to buy a treasury. Diamond hands no more but this is how we all learned. They should be thankful they learning this at a younger age. I started investing in 2000 and it was the best time in retrospect to learn the lessons.
I agree. The covid crash was short-term and government stimulus limited fallout to many individuals and companies.
My parents grew up in the Great Depression. I always had their experience, and seeing crashes in the 70’s, late 80’s, Dot-com and Housing bubble, to keep me grounded.
I have seen so many (even in this forum) state it is better to invest extra cash instead of pay off house. Why pay off house when I am gaining 10-20% every year.
Seeing the market drop is a good time to learn about balancing risk and understanding the future is unknown.
I had a relative in the 80’s talking about going to a seminar about using a 2nd mortage to invest in stock market. Luckily, he did not do that. My Father would always tell us “It is not how much you make, it is how well you manage what you make”.
Good post Nitro.
We're a bit older, seen more than one personal financial catastrophe among friends & family.
Our approach was to completely ignore the "leverage it all" folks. Zero debt for +20 years now.
Won't finance anything, period. Can't pay for it, we don't get it. And we invest conservatively.
Are we making top coin, nope. But we sleep like babies at night, after a warm bottle of milk.
I have been told many times, it is tough to go broke if you have no debt. I agree that getting rid of personal debt is the best step. I hear people talking about letting inflation erode the debt and that may be fine, as long as you know you will have a job and be able to make the payments over the next 15-30 years (of if you have the money in the bank to pay it all off). Life doesn't always care about what looks good on paper.
Wonder how many leveraged folks became disabled at Age 35, 40, 45, 50 or 55.Originally Posted by NitroZ7
Too many variables, especially if you have a family. Guess I'm a little different.
Leaving with less compounded growth sure doesn't scare me like homelessness.
I have never considered the thought of letting inflation erode debt.
When my wife and I married, we did not have any student loan debt. Within a year we had paid off both of our vehicles.
We purchased a very small house (10% interest rate) and made extra payments. During this time, my wife was able to stay home with our small children.
Four years after purchasing our 1st home I got transferred. At the closing for the sale of our house, our realtor stayed to talk to us. He kept asking how we had paid off so much of the principal on the loan. Until he saw the closing documents, he did not know this info.
We told him about trying to save and pay as much as possible. My wife even started using cloth diapers to save money during this time.
We probably should have taken more investment risks over the years, but we have never had to stress about anything imminent occurring. It has brought us peace of mind.
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