The core value is mis-titled, as if the only reasonable sum of our financial interests is the obligation to deduct the assets. Next year could bring a big market bounce, or pay rise, and your ability to earn more should be part of the equation. In addition, net worth does not require equal self-worth pricing.
Still, a positive and growing dollar figure is a fine thing. So take a look at the other pieces next to the property of your equation. A decent part of this can be home equity. Did a lot fall in the last few days? Which? Good. Do you expect your bond mutual funds to be of any value to stock? Again, maybe not.
Remember, stocks are only a fraction of your value.
The horizon is far away now.
Stocks are a long way off: There are several decades between graduation and retirement (or decades between the arrival of a new child and college graduation).
If you are on your way to retirement, keep in mind that the big idea here is that with at least 20 more years to live, there is usually enough time for stocks to come back from an extended closing in the stock market. (And things can really turn out to be extreme for some time, as it did between 2000 and 2010, when stock prices of some of the largest companies in the United States went up and down, even if you invested your dividends.)
If the college is imminent for your kids or you have created a down payment fund to buy a home in the next year or two, you probably shouldn’t have much money in stock. Do you have money in target-date mutual funds as part of the 529 college savings plan? Check out how much it is invested in stocks – and whether that image makes you comfortable.
This might be your first big test.
If you are in your 20s and only start investing for a few years, I do not envy you.
You might think that parents were helplessly seeing half of their home equity and their retirement investments were vaporized, at least on paper, after the financial crisis of the 20’s. If a parent lost a job and you took on student loan debt more than the family expected, it’s no surprise that you are worried about investment risk.
A multi-day reduction can be daunting in the first few years of managing to put some money away from your multiple days. Saving long-term savings somewhere is probably tempting and probably the only way to get a good night’s sleep. But long-term returns on bonds will probably be lower, so permanently transferring money into money means you’ll have to save a lot more to achieve your goals.