This week’s rally on the stock market emphasized one investing principal that we should all take time to remember: consistency.
It was just two weeks ago that the market dropped so much during a one week period that all of the gains from 2012 were completely wiped out. Now the markets just capped off the best week of the entire year.
The S&P 500 rose 3.73% in the past five market days.
With the markets going up, down, up, and down again, how can the investing principal be consistency?
For me it is the reminder to consistently be investing in the market.
My wife and I have our Roth IRA contributions coming out weekly now rather than monthly. That means some weeks the price is higher than the price we paid last week, and other weeks are on the other side of the equation.
But we’re investing and building up shares in our index mutual funds for the long run. This type of consistency makes it easy to shrug off the worst week of the year followed by the best week of the year because we know, eventually, there will be another worst and best week of the year. As long as we’re building up shares and the market goes up over time — which, historically, it has — then we come out ahead.