Navigating Market Downturns

This chapter explores the impacts of the current stock market downturn on personal investment strategies, emphasizing the need for a long-term approach. The discussion also contrasts the experiences of new and retiring investors, highlighting the importance of adaptability and proactive management in uncertain economic conditions.

Play episode from 02:23

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Episode notes

The stock market is shifting, and your portfolio needs to change NOW if you want to reach or stay FIRE (financial independence, retire early). Many early retirees are sitting anxiously, watching their net worth fall by 10% (or more), making each withdrawal from their portfolio increasingly risky. If you’re close to financial independence or are retired early already, you CANNOT risk losing the gains you’ve worked so hard for. This is what we’re doing NOW to keep our FIRE portfolios crash-resistant.

Last month, Scott talked about his big decision to sell off a chunk of his index fund portfolio in fears of overvalued stock prices. What followed? A significant stock sell-off, with some major indexes falling 10% already. Scott urges those close to FIRE to “lock in” their gains and avoid unnecessary risks to push their FIRE numbers higher.

So, what did Scott move his money into, and should you do the same? Should you switch to bonds for a safer but lower-return correction hedge? What happens if this stock downturn lasts years? Should someone in their 20s or 30s, just starting on the FIRE path, stop investing or double down? We’re answering all of your burning FIRE questions today!

In This Episode We Cover

Why Amy uses a financial advisor to help manage her money in retirement

Amy’s journey to financial independence, losing her husband, and retiring early

Assets under management (AUM) versus fee-only advisors (and which one to hire!)

How to reach your FIRE number sooner through “experimental deprivation”

Why you need to have regular money check-ins with your significant other

And So Much More!

Links from the Show

Mindy on BiggerPockets

Scott on BiggerPockets

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