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Feb 25, 2020

Stash’s CEO: Now’s The Time to Think Long Term

By Brandon Krieg

Markets can be volatile, and it’s important to stick to your plan.

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Hey Stashers!

I always like to reach out to you during times of market volatility. And this week started off with a wild ride. Major indices from the S&P 500 to the Dow and Nasdaq reacted to the news that a novel coronavirus, dubbed Covid-19, appears to be spreading more quickly than people had expected. As an investor, it is important to understand how to invest right through market events and think long term.

Coronaviruses are among the most widespread on the planet, related to the common cold and the flu. Covid-19 results in a pneumonia-like illness that, sadly, can be life-threatening.

And while it’s understandable that people are concerned, it’s important not to overreact. Just to keep things in perspective, millions more people catch the flu each year than have contracted the new coronavirus. 

And we’ve been here before. In 2003 there was Severe Acute Respiratory Syndrome (SARS), and a few years later something called Middle East Respiratory Syndrome (MERS), and then Swine Flu–all of which are coronaviruses. Just a few years ago people panicked about the Ebola virus.

So why are markets reacting to a virus? Covid-19 has interrupted global supply chains stretching from China to the U.S., as tens of millions of people stay home due to a regional quarantine. That, in turn, has caused factories to shut down because of worker shortages. 

Already, some prominent companies, including iPhone and iPad maker Apple, have said the virus will cut into their expected earnings for the year.  Car manufacturer Tesla also temporarily closed its factory in China. Meanwhile, coffee chain Starbucks and Scandinavian furniture design store Ikea both temporarily closed more than half of their Chinese stores. (You can read more about that here.)

And this week, it appears as if the virus is spreading to more countries including South Korea, Italy, Iran, and—yes—the U.S.

Market volatility is normal

Okay, so now that you know what’s going on, here’s what you can do. Take a breath and zoom out. Markets can go up just as easily as they can go down. The most important thing I want to say is that volatility is a normal part of investing. Don’t get caught up in short-term market news. Over time, staying in the market and long-term investing is the way to go. 

What I recommend is setting your sights on long-term investing, and making regular investments regardless of whether markets are moving up or down. We built Stash so you can add small amounts of money on a regular basis, and for long-term investing. 

I’ve been investing for decades, and here’s what I know. 

When the market moves sharply down, it’s understandable for people to get spooked. It can be tough to see the value of your portfolio go down. That’s especially the case if you’re investing for the first time during one of these periods. I was once a novice investor too.

But I lived through a bear market in the early 2000s, right after the dot-com bust  and in 2008, I lived through another big market correction. Despite the hard times, I focused on a long-term investment plan and maintained my focus. 

No matter what the market does, continue to buy small amounts of your investments on a regular basis.

Turn on Auto-Stash

Auto-Stash, Auto-Stash, Auto-Stash—I’ve said it before, and I’ll keep on saying it.

Putting your investment plan on auto-pilot is an easy way to add small amounts of money on a regular basis into your portfolio. This way, you can avoid the emotional aspect of investing and won’t get fooled into trying to time the market, which means trying to make guesses about which way the market is heading. 

The key to long-term investing is to build wealth over time.

That means some weeks you’ll be buying shares when they’re high, other weeks when they’re low, and over time, the highs and the lows can balance themselves out. 

Here’s why Auto-Stash can be a great tool. By putting small amounts of money into your investments on a regular basis, you can feel good about ignoring market volatility and focus on investing for the long term. Even just a few dollars a week can make a difference.

Auto-Stash is an incredibly powerful tool, and an essential part of the Stash Way.

Remember the Stash Way

Investing can be confusing, and maybe even scary, when markets become volatile.

That’s why we’ve boiled down our investing philosophy into three basic principles that we hope can guide you as you make your first investing decisions. We call our approach the Stash Way. Here are its three pillars:

  • Invest for the long-term. (Don’t time the market.)
  • Invest regularly. (Turn on Auto-Stash.)
  • Diversify. (Don’t just buy stocks.)

When in doubt, follow the Stash Way, which you can learn more about here.

Work hard, and then make your money work hard for you. By taking a long-term view and consistently investing small amounts of money, you can build wealth over time, and put yourself on a path toward a more secure financial future.

Stash is your financial partner, and we’ll get through this together!

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Written by

Brandon Krieg

Brandon Krieg is the CEO and co-founder of Stash.


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