Panicking About the Market? Tori Dunlap Says It Could Cost You — And There’s Something You Should Do Instead
Written by
Laura Bogart
Edited by
Molly Sullivan
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If you’ve been watching the headlines about the stock market with your heart in your throat, you’re far from alone. Experienced investors and newbies alike get anxious when the economic reports feel like extensive doomsaying. They might even wonder if it’s time to pull their money out — or to never put it in at all. Tori Dunlap understands that panic. And she wants you to take a deep breath.
The author, podcaster and force behind Her First 100k acknowledged that a lot of the economic news has felt scarier than usual this year. But she doesn’t want you to give into fear and cut yourself off from a source of income. Instead, she advised that people take a more logical and empowered stance that can keep them from making a major money mistake.
Understand the Ways That Emotions Impact You
In an interview with MarketWatch earlier this year, Dunlap addressed investors’ concerns about a potentially volatile market head-on. Her insights might be surprising to people who think that investing is only a matter of dollars and cents.
“It’s actually a lot more about managing our emotions and our psychology than it is about graphs and charts and numbers,” she said. “It’s not about how well you know how a stock is going to perform. Right now, it’s about managing your own panic. That is what’s going to make a successful investor.”
Understanding the fears and feelings that trigger you to make impulsive financial decisions — like going on a shopping spree with money you could have invested or pulling your money out of the market — can help keep you out of panic-mode and empower you to make clear-headed choices.
Get Over ‘Analysis Paralysis’
During that interview, Dunlap also talked about how being overwhelmed by anxiety about finding the right time to invest or picking the best stocks can stop people — particularly women — from investing altogether. Gripped by what Dunlap calls “analysis paralysis,” these women give over their own financial decision-making to other parties.
“One [myth] is ‘now is not a good time to invest,’ and we know that’s not true. It’s always a good time to invest,” she said. “Some of the other myths are ‘this is so complicated. I need somebody else to do this for me,’ that’s not true either. You can do this yourself.”
Point blank, she just wants people to push through their fears and get started investing. Learning more about investing can help form an emotional buffer against those scary stories about the stock market — especially when someone is just beginning.
“Imperfect action beats inaction every single time,” she said. “We have the math to prove that every day you don’t invest, you lose money.”
Let Go of the Myth of Perfect Timing
One of the most tenacious myths about the stock market is that there’s a right time and a wrong time to invest — and if you don’t choose wisely, you’re doomed. Not so, Dunlap said. The right time to start investing is after you’ve built an emergency fund and paid off your high-interest debt.
She wants you to remember one simple phrase: Time in the market is more important than timing the market. In an article appearing on Her First 100k, she shared that this phrase has a relatively simple meaning — when you keep your money invested for a while, you benefit from compound interest and you’re less affected by market trends.
To prove her point, she found the historical odds of making money in U.S. markets. Keeping your money in the market for a 10-year period carried 88% odds of making money. Better yet, so far, the odds of making money while investing over a 20-year period are 100%. Pretty good odds, right?
“So the longer you invest, the more likely you are to make money,” she said. “And while investing still involves risk, there’s no 20-year period where you would have lost money.”
Dunlap reminded us all that there’s simply no way to predict the future of the market, but the good news is that we don’t have to. You don’t need to obsess over the hottest stock; instead, you’d be better off staying steady and consistent in your investments. And above all, keep calm.
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