As of this writing, the market is up over 230% from the lows. In other words, had you stayed invested during this time, you would have not only earned your money back, but more than doubled what you originally had.
The Lessons For Investors From The Great Recession
For investors, the lessons are the same tried and true lessons that you hear smart money managers talk about often. The biggest being is to not let your emotions make your investment decisions. This can be accomplished by having a well thought out investment plan and picking an asset allocation that fits your risk tolerance.
Another important lesson from the Great Recession is to invest for the long term. Smart investors during the Great Recession were buying stocks as the market trended lower. They know that you buy when stocks are on sale. I’ll admit that this can be tough to do, especially when you look at your 401k plan balance and seeing it dropping in value daily.
But by keeping a long term view on things, you can be a better investor. Throughout history, investors have encountered a lot of turmoil and in time, we have gotten through each event and rose from it. By taking a long term view, it will help you to stay invested, even when the market is dropping.
At the end of the day, the Great Recession had a major impact on everyone’s financial lives. Many people are still trying to recover financially today. If there is one thing that this even has taught us, it is to live within our means and save our money.
When we live within our means, we are less impacted when financial crises happen. And by making sure we have money saved, we not only are better able to weather the storm, but also invest when opportunities present themselves.
I encourage you to take some time and look at how the Great Recession impacted you and how you can prepare and protect yourself for not only the next major event, but even with the next bear market. Because truth be told, similar events will happen again.
This article has been republished with permission from Modest Money.