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  • I started investing during the “meme stock” boom, though I didn’t buy AMC or GameStop.
  • Like millions of new investors, I’ve lost a lot in the last year. But I’m not worried.
  • I’m investing for the long term and time is on my side. Plus, my investment mix mitigates risk.

I didn’t start investing until February of 2021 at the ripe age of 35, along with millions of other people. If you’re a new investor like me, you’ve experienced drastic losses your first year of investing, and it looks like it’s only getting worse. In fact, as I was watching the YouTube show Breaking Points this morning, one of the hosts said that the “meme stock” generation is down about 100% over the last year. Although I didn’t invest in GameStop or AMC stocks, I started around that same time and am down significantly.

However, even as I watch the market continue to spiral out of control, I’m not the least bit worried. Much like how I learned to improve my credit score, I read a ton of books about investing, so I have some peace of mind.

Time is on your side when you invest for the long term

The first thing I learned is that long-term investing is one of the best financial decisions you can make for your future. I always assumed that buying stocks was basically gambling, and as someone living in Las Vegas, I’ve seen how gambling can ruin lives. The reality is that day trading is more like gambling because you’re constantly making speculative decisions while actively trading. Investing is buying and holding on to stocks for years.

When you invest, time is on your side. Warren Buffett is one of the richest men in the world, and he’s quoted regularly about his thoughts on investing. Yes, Buffett has a talent for picking good stocks, but time has played a crucial role in his wealth. He bought his first stock at 11 years old in 1942. 

Just think about how many market crashes he’s experienced in his lifetime that were as bad or worse than what we’re currently experiencing.

I personally started investing after my grandfather passed away in late 2020, and I received some inheritance. He lived modestly, but he had money to leave to his family because he started investing decades ago. Like Buffett, time had amassed him a ton of wealth.

This may seem anecdotal, but the proof is in the data. While stock market returns have gone up and down annually over the past decade, the average return over the past 10 years was about 9.2%, meaning that if you stayed the course and didn’t sell at the slightest turbulence, your investments would be up overall.

You don’t lose money if you hold on to your investments

Another lesson I learned early on about investing is that you don’t lose money if you don’t sell. I have a full-time job as well as additional sources of income from freelance work, self-publishing books, and my podcast. With no plans to touch this money until I’m ready to retire, knowing the history of the stock market keeps me calm through these rough waters.

Target-date funds and index funds can help you mitigate risk over time

Through my financial education, I also learned about target-date funds. These are funds that automatically invest your money based on when you plan to retire or when you’ll need the money. Basically, the algorithm adjusts your portfolio to have less risk as you near that date. Stocks are considered the highest risk, commodities like gold and bonds are less risky, and then there’s cash.

My target date through Schwab is the year 2046, which is over two decades away, so I can have a bit more risk. Currently, my allocation is about 8% cash, 9% bonds, 2% commodities and 80% stocks. If people smarter and wealthier than me designed their algorithm to expose me to that much risk at this age, then I’m fairly confident that I shouldn’t be too worried about the current markets.

I’m also confident in the knowledge I’ve acquired through educating myself via books. Based on my personal risk tolerance, my holdings outside of the target-date fund are primarily in an S&P 500 index fund. I also have a small allocation in individual stocks that I have faith in, some industry-based index funds, and a little in crypto as well.

As someone prone to anxiety, I know how scary this all can be. Within months after starting to invest, the market started dropping, and I was freaking out. What’s helped me more than anything is educating myself as much as possible. So, I empathize with those who are in a panic.

But for me, as long as I have a steady income, I’m going to keep investing into my retirement fund and increasing my other investments as well. As long as the United States doesn’t completely collapse and can bounce back in the next 20 years, I know I’ll be fine.