Today marks our 10 year wedding anniversary and so it seems fitting to think back to the effect of investment crisis anniversaries. There were lessons learned at each investment crisis anniversary and it shapes how you continue to invest over the years ahead. See our examples in the list below.
Worst One-Day Stock Losses
Recently Facebook just set a new record for the biggest one day loss in history, probably not a record it was hoping to set as it turned into an investment crisis for the books. This serves as an important reminder that regardless of how great a company can seem there is always the possibility as it grows to encounter issues that can affect it’s stock price. Remember to stay diversified so the effect of one company’s performance doesn’t rock your whole portfolio.
The Great Market Crash of Oct. 24-29, 1929
While we believe that markets move higher in the long-term we still have to keep reality in check with events that have happened in history. There is a reason that we believe people should keep emergency funds and money in accounts that are liquid and not invested, in case of emergencies. While we can’t shelter ourselves from every risk in life, we can plan to be prepared just in case things happen.
The Savings & Loans Crisis Peak 1988
Using short term savings to fund longer term debts was a recipe that led to the financial sector shutting down several institutions, hurting many people in the process. Again in 2007-2008 we saw a similar financial institution melt down that brought the market down with it too. It’s so important to create a plan so that you don’t finance too many things in life, but rather over time decrease what you owe and increase what you own.
What Does This Mean For You?
There are many more events that you can likely think of such as the dot-com bubble. When an event like this happens it can shape whether you begin to fear investing or whether you remain committed to a stable, diversified investment strategy. It’s important to think about how these have affected your belief about the market. Maybe you’re a history buff and you’d like to see some more big dates that made this list of 100 events that changed business.
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We are financial advisors in Deer Park and Barrington, IL. A team with a passion for helping others design a path to financial success — whatever success means for you. Each of our unique insights fit together to create broad expertise, complete roadmaps, and creative solutions. We have seen the power of having a financial plan, and adjusting that plan to life. The result? Freedom from worrying about the future so you can enjoy today.