4 financial planners explain why you shouldn't sell your investments when the stock market tanks

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Anyone who’s checked their investment account balance in the past week has probably felt the dread down to their toes.

That’s a natural reaction to witnessing a stock market in free fall, but financial planners largely agree: Don’t go plotting to sell out completely. You’ll only miss out on huge opportunities to build wealth.

Here’s what four financial planners have to say about the downsides of selling your investments when the stock market tanks.

Timing the market is a fool’s errand

The stock market does what the stock market wants. If its current state is any indication, unpredictability is the only certainty. But in order to benefit from the eventual rebound — it will happen, it always does — we have to ride the wave and stay invested.

As Brian Fry, a certified financial planner and founder of Safe Landing Financial, explained to Business Insider: “It is a scary time for many people in different situations. Nobody knows where the market will bottom. There is no proven way to time the market.”

The average investor “should continue following their investment and rebalancing strategy determined by their risk tolerance, time horizon, and financial goals,” Fry says. “If their situation has changed, they should consider updating their financial plan and tailoring their investments to reach their goals.”

Fred Egler, a certified financial planner at Betterment, previously told Business Insider contributor Jen Glantz that a market freefall like we’re seeing now won’t have an outsized impact on long-term investors. Further, selling out completely isn’t a good solution.

“That’s because over very long periods of time, say, a retirement time horizon of over 20 years, the market generally tends to combat short-term volatility and tick upwards,” Egler said. “What’s more, timing the market is extremely difficult: If you stop investing now, how will you know when to start investing again? It’s almost impossible to get that right.”

The opportunity cost is high 

Stock prices have plummeted to levels not seen since the Great Recession. Lucky for us, holding on to these investments — and even buying more — presents a huge opportunity to build wealth.

“If you sell now, you’re selling when the price is low. You paid good money for the investments in your portfolio. It makes little sense for you to sell them for such a tremendous loss,” Marguerita Cheng, a certified financial planner and CEO of investment-advisory firm Blue Ocean Global Wealth, wrote in an article for Business Insider.

“By the time the market recovers, and you feel comfortable jumping back in, the same stocks you sold at a loss could be priced much higher,” she continued. “When you sell low and buy high, you lose money.”

Your goals probably haven’t changed

Stock market chaos can prompt even the steadiest among us to question our investment strategy. But that’s an emotional response; one you’re better off acknowledging, but not acting on. Your investment strategy is designed to help you achieve specific goals, in spite of daily market movements.

“Chances are, absolutely nothing has changed in terms of your financial goals over the last week, the last month, or the last year. So, why should a market drop change the way you invest? The answer: It shouldn’t,” Jeff Rose, a certified financial planner and founder of GoodFinancialCents.com, wrote for Business Insider

Rose continued: “In other words, to win in the investing world, you have to come up with a solid strategy for the long-term. Not for today. Not for tomorrow. But for ten, twenty, or even forty years — as long as you need to grow wealth to reach your financial goals.”

In the event your goals have shifted since you last reviewed your investment strategy, Cheng said, a high-stress time isn’t ideal for making big financial decisions.

“In times of uncertainty, it is good to examine your goals and align your investments,” she wrote. “During such periods, it’s not wise to change your strategy. Wait for things to settle down before making any adjustments to your investments.”

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