Now More Than Ever: Stay The Course

These are difficult times for most American investors. An already-shaky stock market was thrown into disarray in the wake of the horrible terrorist attacks on 9/11/01. Although some level of stability has returned to the U.S. and world investment markets, it remains a very volatile time.

So what is an investor to do? For most people, the answer is simple: Do nothing. Especially with the money in your employer-sponsored retirement savings plan.

That’s because the current market difficulties are a short-term issue, and unless you are very near to retirement, the money in your plan is a long-term investment. You need to look not at what the market has done over the last several days, weeks or even months, but at how it has performed over many years.

Historically, the stock market has returned more than 10% annually, on average, since 1926. That is significantly more than any other investment class. Some years, of course, the returns have been much higher. And some years the returns have been much lower, or even in negative territory.

Over time however, stock market returns have tended to even out. Of course, past performance is no guarantee of future results. But if you are an investor in stocks or stock funds with several years or more to go until you need your money, history would suggest that time is, indeed, on your side.