2. I’m investing for the long haul
If I were planning to cash out my portfolio next month, I’d be sweating it out over this recent bout of volatility. But that’s not my plan.
I’m nowhere close to being ready to retire, and I don’t plan to do anything to my portfolio in the near term other than perhaps add to it. And that knowledge helps keep me calm.
3. I don’t need to tap my portfolio in a pinch
I’m what you might call overly conservative on the emergency savings front. For most people, three to six months’ worth of living expenses is enough for a solid emergency fund. But I prefer to keep more like a year’s worth of living costs in the bank. Part of the reason is that I’m self-employed and therefore not eligible for unemployment benefits or paid medical leave should the need arise. But also, having a more robust emergency fund helps me invest more confidently.
In fact, a big reason stock market downturns don’t bug me is that I don’t rely on my portfolio as a near-term cash source. Rather, I rely on the money I have socked away in the bank. That money, to be clear, earns practically no interest. But the upside is that it’s there for me when I need it and prevents scenarios where I might have to cash out investments at a loss.