It can be so easy to get caught up in the day to day rise and grind of everyday life and easy to lose focus of the big picture. We live in a world where news is constant and often times it can feel like we’re living in difficult, dangerous and troubling times, especially in regards to the economy. Politicians and social media influencers will bemoan the troubling economy leaving us with a feeling that the economy is about to collapse and we should all be worried. This can get exhausting!

I work in the tech industry and have seen plenty of layoffs all around me and have seen former colleagues struggle to get jobs. Many end up landing new jobs, it just can take some time. I also personally feel the effects of inflation and regularly feel frustrated with how much simple things like gas and groceries cost. It feels like we are spending more and more money each month just for our everyday lives. 

For many of us, we invest in the stock market. Whether it’s through your retirement or an individual brokerage account, many of us have a portion of our net worth invested in stocks. It can be tough when you check the headlines and see “DOW DOWN 500 POINTS” and wonder how your investments are faring and it feels pretty depressing. There’s nothing worse than watching your hard earned money lose value with factors out of your control! I think it’s important to keep the big picture in mind and keep some perspective. This is something I think a lot about and figure that you might benefit from hearing my perspective on this as well!

The past 4 years

I think it’s good to keep context in mind and what a crazy 4 years it’s been since 2020. I remember early COVID when the stock market dropped like 15% and everyone panicked. Thankfully I did not panic and didn’t liquidate all my assets (like some people I knew did) and kept them all invested. It took about 3 months and then WHAM – the market came ROARING back. The 2nd half of 2020, all of 2021 and a lot of 2022 was nuts – people were making money left and right. The adage at the time was “_____ only goes up” – i.e. real estate, stocks, crypto all continuously grew in value. What a time to be alive!

Then the end of 2022 and 2023 came along and things started to slow down, the stock market wobbled a bit, bitcoin got cut in half and layoffs started happening. 2023 was a bit nerve racking about jobs and the economy and this ugly thing called inflation started popping up and everything felt way more expensive than it used to be. Now we’re in 2024 and it’s tough to say. There’s plenty of good in the economy – unemployment is low, inflation is slowing down, the stock market feels ok, but there are plenty of headwinds in the economy and world as well with plenty of uncertainty. So what should we make of it all?

Look at the numbers

I am a big believer in index funds, which is a mutual fund that basically buys all the major stocks in the stock market – i.e. it’s a great way to get exposure (be invested in) the entire market. Time and time again at least for me an index fund has proven to be the way to go. Sure I could pick a few individual stocks and make money but for every winner I picked, it also felt like I picked a loser. As such, I keep most of my money in an index fund – the Vanguard Total Stock Market (VTI) fund to be exact. 

You can look at the returns of this fund here:

• 2020: 18.88% return
• 2021: 24.09% return
• 2022: -20.8% return (yikes)
• 2023: 24.05% return 

Or in a visual graph here is VTI over the past 5 years:

As much as I read about stocks and track the economy, I have decided that I am not an expert stock picker. Also I have learned about myself that while I am ok taking risks, that generally I am not a ‘bet the farm’ type of a guy and don’t love taking big risks. To me, these returns are phenomenal, and the best part is I didn’t have to think once about my money working for me – it just worked pretty dang hard on it’s own! 

Don’t stress, don’t predict the future

I have also learned about myself that it’s impossible to predict the future. We live in a what feels at least to me like a crazy world with all sorts of stuff happening all the time and crazy things I never thought would happen are happening left and right. Ultimately I try to worry less about the bigger picture, and just keep my head down and keep invested in the stock market. 

I do have an emergency fund – about 3 months of expenses in cash in a high yield savings account. I also have other cash accounts as well for other future purchases (i.e. car savings). Other than that I’m probably 60% in the stock market and 40% real estate. There’s a lot outside of my control and I’ve come to learn / constantly remind myself that what I should be doing is trusting the process. Over the last 50 years the stock market has grown 10% year over year. That to me feels like a safe return. There were plenty of lower or even negative returns in there, and I’m sure lots of years that felt pretty scary, but assuming you kept your money in there – things have worked out ok for you with a steady average growth rate! 

So as stressful as things can feel, I try to remind myself about the average! I also like to say if the stock market really plummeted, we’d have bigger worries on our hands than our investments – i.e. zombie apocalypse style, and for that I have some food and water set aside (not like full on prepper but you know a somewhat reasonable amount!). 

Summary

This market and this time period can feel stressful, but looking back it’s kind of always been that way – there’s always plenty to worry about if you choose to do so. For me I’m trying to stress less and let my investments do their thing, and so far it’s been solid! Slow and steady growth is what I’m after and a habit of consistent investment into the stock market into an index fund and letting it sit there has been working out for me, and I’ll continue to do so!