It's Hard to Stick With Stocks

Blogger explores that nagging feeling that you're making poor money decisions.

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GBlogger from Can I Get Rich on Salary writes today's guest post:

I often wonder whether I'm being stupid. This is prompted by my long history of being stupid. But it's also human nature. We all have moments of self-doubt.

A 24-year-old reader named Kathy expressed this in a comment on my blog:

I worry that I am stupid for faithfully throwing money into my 401(k) plan only to see it decline by 10 percent because I put into stocks because I'm young and that's supposedly what young people should do. Is that typical for someone my age to worry about?

When you're in your 20s or just getting started in managing your finances, it can be a scary and confusing time. It can be hard getting started. It can be hard navigating "what you're supposed to do." And if you manage to figure out enough to get started, a chaotic stock market and fearful economy can quickly test your resolve.

Stay strong. First, you've taken the time to care about your finances. That alone puts you ahead of the game. You've made a good choice in starting to save and invest early and should stick to it. Second, you're not alone—within your generation or others. I remember my 20s (circa the Paleolithic Age). My 401(k) did nothing during a boom time and then plummeted during a bust. I was pretty sure I was being stupid.

But I was wrong. Years later, my 401(k) is nicely into the six digits. And I didn't necessarily follow the script. Kimberly Palmer notes, in some circumstances, you may have to defer saving for retirement. I cut back how much I was saving while juggling student loans and credit-card debt. I also overreacted to a market downturn by moving too much into bonds. But it's working out OK. It will for Kathy—and you—too.