Market sell-off for small investors
How does today’s sell-off affect persons with a small retirement account (A retirement 2030 account through a major institution) When the markets dip so dramatically, are we in effect buying shares at a lower rate as it rises back up? Which would be a great scenario. Or do we just lose everything we had just gained and are starting again to regain that loss? Thank you Terry, much respect to you for helping all of us out here.
Terry Says
Well, first it all depends on what you’re investing in – and when the investments land!
In the current market action, tech stocks were primarily hit hardest by news of a Chinese model that is less expensive and perhaps better than our own for AI.
So the NASDAQ sold of in a big way, and the tech-heavy S&P 500 was down a lot. But the Dow Jones Industrial Average was actually UP on the day!
The entire value of your 2030 fund dropped — but because it was likely invested more conservatively it did not drop as much in percentage terms as the NASDAQ (which was down 3%), or the S&P 500, which was down about 1.5%.
If you are still contributing money to your retirement account, then new purchases will come at a lower price.