Investors regularly panic when the stock market endures a downturn and rush to sell their assets. It’s a tale as old as time that demonstrates the rewards that come with patience, and these types of stories frequently end up on Reddit.
A Redditor in the Investing subreddit recently asked if people were still investing in this market. The original poster mentioned that they know some friends who are holding cash and waiting for the market to drop. However, Redditors were pretty adamant about staying the course in the comments.
“Never totally get out of the market,” one of them declared.
Redditors shared their thoughts and explained why they are still in the stock market.
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Go Long For Over 20 Years
Everyone has different goals and timeframes, and having a clear understanding of your financial situation can lead to better decisions. One commenter suggested that staying in the stock market is optimal for people who can wait 20 years.
This same commenter also warned people not to put money in the stock market if they need it very soon. For instance, the money going toward a down payment next year or the upcoming rent payment shouldn’t be in the stock market.
“Recently, most pullbacks recover quickly, but when it doesn’t, and you need the money, you’ll have to cash out at a lower price. Lots of people suffered from this,” the commenter explained.
One person replied with a caveat, saying that you should save up cash until you have $20,000 for quick access. Once you reach that milestone, the commenter suggests going back to investing.
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All Cash Since The 2000 Dot-Com Bubble
Leave it to Redditors to share humorous takes while diving into important topics. One commenter jokingly said that they have been all-cash since the dot-com bubble because the stock market is too risky.
“Making a steady 1% a year in high yield after inflation. Feeling smart,” the commenter continued.
Redditors jumped in on the trend, with the humor building as more people left comments.
“Same bro. I’ve been keeping all cash since 1982. Too many bubbles to keep track of. I keep my cash under my mattress,” another commenter joked.
The message behind these posts is important. Bubbles come and go, but the stock market has continued to trend upward in the long run.
Stocks Go Up With Inflation
Some Redditors mentioned that cash gradually loses value due to inflation. While high-yield savings accounts can mitigate this effect, interest is taxed as ordinary income, making it an uphill battle.
However, stocks tend to go up with inflation since companies gradually raise their prices. While the stock market can perform poorly with hyperinflation, gradual inflation often results in asset classes reaching new highs.
Holding cash for the long run is a losing formula since it consistently loses value. Some Redditors are using margin instead of retreating to capitalize on the fact that fiat currencies lose purchasing power over time. While that makes your bank account’s purchasing power weaker, inflation also makes your existing debt easier to pay off.
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This article ‘Never Totally Get Out of the Market’ — Why Redditors Say They’re Still Betting Big Despite the Chaos originally appeared on Benzinga.com
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