Financial planner: Why you should invest despite inflation fears

Inflation is rampant in the current U.S. economy, and we are in what is the 29th bear market for our nation’s stocks since 1929. We’re experiencing the first bear market in bonds in a half-century, with returns, by some measures, the worst in almost 180 years.

But what if I told you that we’ve been here before and there is no need to panic, especially when it comes to your retirement investments? That would go against current conventional wisdom, which is that this time is different. It’s normal, for example, to expect two or three down years out of every 10. But is this time normal? It doesn’t feel like it, does it? Yet, I’m reminded of what Sir John Templeton, one of the greatest investors of all time, said: “The four most expensive words in the English language are ‘This time it’s different.’”

This time, I believe, is not different. Have a good plan and stay the course. How do you know if you have a good plan? Find a trusted adviser who can look at things objectively. Specifically, engage a certified financial planner who acts as a fiduciary and is bound to put your best interests first. They can advise you on how to help your money last through retirement, determine your retirement income or take a second look at your current portfolio.

It always feels different when you’re in the middle of a bear market. Fear that it may continue, and the stock market will go to zero, would mean a total breakdown of the U.S and world economy. That’s not impossible, I guess. Just as it is not impossible that the sun will not rise tomorrow. If either of those happen, we have a lot more to worry about than our stock certificates.

Again, we have been here before. I’ve seen multiple situations that would be classified as “different.” On Black Monday, Oct. 19, 1987, the Dow went down 22.6% in one day. That’s certainly not normal. It finished that day at 1,739. Today, it’s about 32,000.

There was the Dotcom Bubble. Everyone made a killing in dotcom stocks, until they didn’t. Between March 2000 and October 2002, the NASDAQ index lost 77% and fell to 1,114. That’s certainly not normal. Today, it’s well above 12,000.

Remember the Subprime Housing Lending mess? High-risk mortgages, bundled to supposedly lessen the risk, did not do so. Home prices fell, borrowers defaulted and the entire financial system was hammered. That is not normal. On Sept. 29, 2008, the Dow fell 777.68 points. It was the largest single-day drop until March 16, 2020, when it fell 2,997.10 points at the beginning of the pandemic, which caused some of the biggest market swings on record.

A specialist rests his head in his hand as he works on the floor of the New York Stock Exchange.
During downturns like the one we are experiencing, there are some people who want to be in cash when the market is going up until they “feel better.” Logically, of course, that doesn’t make sense. But it isn’t about logic. There are no absolutes, so the best course of action is the one with the highest probability of success. That course is to hold a well-allocated and diversified portfolio focused on accomplishing your long-term financial goals. A trusted advisor can keep you focused on your plan, and not get distracted by the day-to-day movement of the market.

Let facts, and not emotions, be the bedrock of your retirement plan.