We know that over the long term, securities holdings can grow a substantial amount. Market downturns will be corrected, given time to recover.
There is a problem with this thinking, should a sale be necessary during a downturn. Unfortunately, there is little an investor can do about it, except keep one’s fingers’ crossed about forced selling in a down-cycle.
Should the market flop just when an investor needs a securities’ proceeds and has to sell, no planning in the world, no high-powered adviser, will help.
If you need funds, the long term advantage of holding stocks will not help in a down market. In an emergency, selling into a bad market will create losses, despite long-term growth potential.
Apart from keeping your fingers’ crossed, anticipate emergencies with some liquidity, such as short-term bond holdings.
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