(Note: Read Part I of Investments in a Pandemic here. Retired or close to retired? Head here. Need more advice from MOAA? Head here.)

People who are working, contributing to retirement accounts and not thinking about retirement should have portfolios heavy in stocks. Being heavy in stocks means you will follow the stock market’s movements like a cork on the ocean. This will make some of you nervous, but have no fear: There’s a method to this madness.

Contributing to your retirement accounts on a regular basis employs a strategy known as averaging down or dollar-cost-averaging. This strategy transforms a falling stock market from something to be feared as a risk to an opportunity to be welcomed.

As the stock market falls, the share prices of your stock funds get cheaper. As they get cheaper, your contributions buy more shares. Shares equal ownership. Ownership that creates wealth.

Wealthy people are wealthy because they own lots of ownership assets. Buying stocks in a down market is like buying items on sale – same product, cheaper cost. It is madness to be pulling out of stocks in a down market.

Market drops are few and short-lived; the stock market is up 73% of the time. It will be higher in your future. You never know when the drops will occur. That means you must be constantly contributing to a stock portfolio in your retirement accounts to “be there” when the drops occur.

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One of the fastest growing population segments in our society is the 50-year-old millionaires. These people understood the lessons above. They achieved wealth through a strategy, thriftiness, and discipline. Read an old but timeless classic, The Millionaire Next Door by Dr. Thomas J. Stanley, to learn more.

The Bottom Line

Carry these points forward as you continue a successful investment journey:

• Managing a portfolio does not require extensive knowledge. It doesn’t mean you must master buy and sell techniques or pick the perfect stock.
  
  
• The markets aren’t rigged. No wealthy person is hindering you from having wealth.
  
  
• Wealth is not a zero-sum game. It expands to encompass all who know how to create and cultivate it. Your investments provide the capital for innovators and builders of wealth to expand the wealth pool. Your investments participate in the expanding wealth.

Need more guidance? MOAA offers individualized advice to Life and Premium members, who can reach out via email. Not a member? Join today!