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The stock market is a rollercoaster, and recent times have been no exception. After a sharp 20% correction, the market has clawed its way back to its highs, even as lingering bad news—economic uncertainty, geopolitical tensions, tariffs on, tariffs off, and other disappointments with Donald Trump shaking things up—continues to unsettle investors.

Market corrections, like the one we’ve just endured, are unnerving. Headlines scream warnings, pundits predict doom, and the herd mentality kicks in, urging investors to sell before things “get worse.”

Yet, selling near the bottom, or at least having a low exposure at that time whether the selling was well-timed or not, often traps investors in a perilous limbo: unsure when or if to re-enter the market. This fear-driven decision can lead to missing out on the recovery, as we’ve seen with the market’s recent rebound.

The merits of long-term investing lie in its simplicity and resilience. By holding quality assets—index funds or excellent individual firms—investors can weather short-term volatility. Temporary bad news, while unsettling, rarely alters the long-term trajectory of well-managed companies or broad market indices. Reacting to negative headlines risks locking in losses and missing the eventual upswing.

Perhaps right now, with the S&P500 near its highs, is exactly the time to sell. Indeed very likely the market will at some point in the future be substantially lower again, for the CAPE is near historic highs; it is just a matter of waiting and we are assured the market will at some point be lower, at which we can buy in.

But how much lower should the market be? 30%? 40%? Should the CAPE return to its long-term average of 15? What if it remains above that for another 20 years? At what particular time will you buy in?

Now that we're being specific, here lies the risk. Investors who exit during a correction (or get it right and exit prior to the correction) often wait for “confirmation” that the market is safe, only to buy back at higher prices or miss the rally entirely. This permanent loss of opportunity can profoundly derail your long-term return.

In today’s environment, with the market recovered but uncertainty lingering, the temptation to act on fear remains. Yet, the long-term buy-and-hold approach offers clarity: stay invested, tune out the noise, and let time work its magic. The market’s history is one of resilience, and those who in the past embraced indifference to news, over panic, tended to have the best long term performance.

- Manlobbi

here lies the risk. Investors who exit during a correction (or get it right and exit prior to the correction) often wait for “confirmation” that the market is safe, only to buy back at higher prices or miss the rally entirely. This permanent loss of opportunity can profoundly derail your long-term return.

In today’s environment, with the market recovered but uncertainty lingering, the temptation to act on fear remains. Yet, the long-term buy-and-hold approach offers clarity: stay invested, tune out the noise, and let time work its magic.

No doubt that's the best possible advice possible for somebody in the 1st half of their live!

Many here are much closer to the end than the beginning, with the risk of running out of time, before magic can work.
Many here additionally because having adhered to that advice already "won the game", resulting in the possibility of losing what was won having far higher priority than before.
In both cases not to be invested at times can be the most rational decision (contrary to one born out of fear), resulting from weighing all factors, not only the beauty of LTBH, but also age, living expenses, income, assets etc.

Many here are much closer to the end than the beginning, with the risk of running out of time, before magic can work.
Many here additionally because having adhered to that advice already "won the game", resulting in the possibility of losing what was won having far higher priority than before.
In both cases not to be invested at times can be the most rational decision (contrary to one born out of fear), resulting from weighing all factors, not only the beauty of LTBH, but also age, living expenses, income, assets etc.

More, more, more has never been a motivating factor for me. At 19 I set a goal of early retirement and we accomplished that option, even if DH found he lacked the desire to follow through and at 66 is still doing some consulting. At least he no longer puts in 60-80 hours a week and is certainly healthier for it. My investing style was pretty aggressive, being 100% stocks beyond the 3-6 months expenses in liquid funds. In 2016 the investing world became too confusing and unpredictable for me, and I quite simply stopped putting more cash into the market. Timing was appropriate, given our retirement goals and we are now about 50% non-equities. I have absolutely left a ton of cash on the table and am completely OK with that. I sleep well at night and we have plenty of funds to do what we want as well as to help our kids get a leg up in their adulting. They should receive a decent inheritance, though their college education and planned gifting along the way is all we have told them to expect. I have no desire to impose a couple of trustafarians on this world.

The ability to be content is a great tool in building an asset base, in terms of having seed money via LBYM. It's also a great way to hold on to what you have. Greed and fear are both emotions that have no place in investing.

IP

They should receive a decent inheritance, though their college education and planned gifting along the way is all we have told them to expect. I have no desire to impose a couple of trustafarians on this world.

This is OT obviously, but have any here thought about giving kids an inheritance early instead of after death? Not enough to do nothing, but enough to not have to stress so much about possible layoffs? I have two sons stressing about layoffs.

Maybe we can start a thread about this somewhere else if there is any interest?

"but have any here thought about giving kids an inheritance early instead of after death? "

One of things I'm doing is paying for significant house renovations directly for my son's house.

They should receive a decent inheritance, though their college education and planned gifting along the way is all we have told them to expect. I have no desire to impose a couple of trustafarians on this world.
...
This is OT obviously, but have any here thought about giving kids an inheritance early instead of after death?

This has already started with what I referred to as planned gifting. I got a small inheritance as an adult, which was absolutely not when it was needed, so I suggested to DH that instead of simply building as high a pile as we could to hand off at death, that we start gifting now. We may do more later, depending on how things go with this round. The stated goal behind the gifting was to apply it towards something that would get them ahead, be it down payment towards a house, starting up a business, or more education. We expressly told them it was not for a splurge on exotic trips or anything that did not lend towards a more stable future. While we would not tell them what to do with it, we did want to know what they did with it and would of course be happy to be involved with their planning process if they desired that. Or not. Frankly much of this came up with a desire to get Youngest out of the undependable car he was in, as well as a desire to give them some funds to dream with and manage. It's hard to plan towards a dream, or even dream it, if you don't see a way towards funding those dreams.

Youngest did spend a considerable amount of time researching vehicles, following in on our example of paying cash for depreciating assets and only spending about 1/3 the gifted funds on what seems to be a great used vehicle that he will seriously be able to use and is much better in useability than the car with over 250K miles that was falling apart on him. He is looking at using some of the rest of the funds to get certificates that are required for his environmental career, in things like stream remediation, and it has freed him up to do some investing with the cash he already had on hand. He is considering buying a home, and is getting to know the market. Happily he is working for county gov't and not at great risk at losing his job, having in fact just gotten promoted.

Eldest is looking at buying a house with his funds. He is doing well at his career, but the gifting accelerated this option. He is in cybersecurity, so highly unlikely to not be able to find employment, and honestly receiving funds from us only because we wanted to give some to Youngest, who chose to save the world rather than go to a higher paying career.

Both kids are debt free, though not debt fearful. They have credit cards, but pay them off in full every month. Great credit, in part because we gave them in college one of our credit cards for emergency use. Never been used, but spike their credit by being added to a credit card that was older than they were. Youngest saw how his friends with expensive new cars had huge car loans as companions to their student loan debt, and shied away from what he was seeing as poor value. (Sorry, proud Mom brag.) Like most young men their age, they are still single, and know we have their back should the $hit hit the fan, which we had to do when Youngest graduated during Covid, when there were no professional jobs to be had. (Gave him the downstairs in-law apartment, rent free with utilities, which allowed him to preserve some pride and save money while he worked a landscaping job and looked for other work.) We also are confident that it would be unlikely they would ever need that back up, but knowing the back up is there lets you take on risk.

We have also always, since they started working at 14, paid the funds for their Roth IRA, up to the max allowed by law, and will continue to do so which allows them to focus on their Roth 401Ks. While we don't have control over what they do with this money, they know that we expect it to remain in the Roth for retirement. If they every have kids, we will pay for their college education. Teaching people how to fish is way better than always feeding them.

IP,
absolutely happy to hear of other ways to truly help the kids, without inadvertently hurting them

Lots of discussion on this topic over at the Bogleheads Forum along the lines of "Die with Zero."

Here is an article from Christine Benz at Morningstar on this topic: https://www.morningstar.com/retirement/we-need-tal...

More and more seem to be interested in giving while living instead of having children inherit the money in their 60s-70s when the impact isn't as high as say in their 40's.

"but have any here thought about giving kids an inheritance early instead of after death? "

Many annual meetings ago, Charlie Munger chose to answer one of the "kid" questions about how to get rich. His answer, as I recall it, was to build the first $100k of capital to invest, invest it wisely, and let compounding do most of the work thereafter.

Another quote - from a magazine article, maybe a book - was to "Die Broke". The thrust of that article was to deploy your inheritance beyond living needs early when you could still see and enjoy the consequences on others lives.

So we've tried to combine the two.

I remember our early years of marriage when buying cars, raising a home down payment, saving for college, and saving thereafter was a constant challenge. I seemed to never have time to learn about investing - there were more urgent matters. It took decades of "working for a living" to accumulate enough capital to make any real money. Fortunately I figured out - with the help of many friends - to plow my capital into Berkshire, trusting Buffett. That's gone well.

So when our daughter came along, received her college education, and got married we decided to try to speed up their raising their investment capital. It wasn't done by gifting them a lump sum to do so. It was by helping with the first paid for cars, the home-down payments, etc.. In return, their job was to save and invest early, and get the compound machine going early in life. That's worked out well for our family, and they plan to do the same for their two children, now entering adulthood. An extra 7-10+ early years makes a big difference later in life.

They understood that if they weren't saving and investing, our game plan could change. They never took advantage of their early assistance to spend unwisely.

Different folks will have different approaches. This worked for us.

“ If they every have kids, we will pay for their college education.”

Thanks IP for your detailed thoughts. The gift of a great college & med school education and leaving debt free was the large & best gift imo from my parents. We did not receive other real gifting until recent years from my mom, but being debt- free was very liberating after a pretty long training (30yo before joining a private practice).

My brother & SIL has adult kids and grandkids and he has gifted the max 5 years early in their adulthood ( nearly $200K) to help each child & their spouse with home ownership. I like that decision.

I set up an investment match program for my kids. Up to $12,000 a year.
Each quarter, we give them 100% match for what they have put toward retirement account(s).

Through experience, both my own and theirs, a gift of money gets consumed in lifestyle creep or paying off credit card balances (which they KNOW they are not supposed to carry) or treated as found money and blown.

In the past I had them open an account at Etrade and to give me the account number, then occasionally transfer some stock shares to them. One had not looked at the account for several years and called me one day and said "I checked the account and have NN shares of GOOG that I didn't know about."

My brother & SIL has adult kids and grandkids and he has gifted the max 5 years early in their adulthood ( nearly $200K) to help each child & their spouse with home ownership. I like that decision.

The primary gift we give our kids is that we will not be dependent on them. Only after you are sure your needs are taken care of should you consider the gifting.

IP

I am interested as I am considering this for neices and nephews currently. also interested to hear from any "internationals " her ein the USA as that does complicate matters.

Here is an article from Christine Benz at Morningstar on this topic: https://www.morningstar.com/retirement/we-need-tal...

Thanks for the article. It's spot on.

We are of the generation where Roth IRAs were not around initially, and as such the result of our throwing the max allowed at our IRAs and 401Ks have left us with a huge tax debt when RMDs become an issue down the road. Yes, a very first world problem, but we expect our taxes to be higher in retirement than while working if we do nothing.

One of the partial solutions to this is Roth conversions, which we have been doing up to the 24% tax bracket annually. My calculations show that we will minimally be in the 28% tax bracket with RMDs, in part due to the expected reversion to the 2017 tax rates. Since we pay the tax with cash on hand, rather than from the conversion, we view it as essentially depositing the taxes paid on conversion into the Roth. Because of the change to inherited IRAs, requiring a 10 year draw down, inheriting a Traditional IRA can be somewhat problematic for our kids, and certainly paying more in taxes is not what we envisioned when making the initial deposits. Both of our kids are still single, and at 30 Eldest already makes more than DH did at the end of his career, which would result in huge tax bills with the TIRA inheritance.

Interestingly, even after about 8 years of Roth conversions, the stock market has made it such that our TIRA balances have gone up. Not complaining, really, but the conversions have not actually lowered our future tax bill from RMDs. RMDs won't be imposed on us for about 7 years, so no action taken yet, but should we still be in the same position, we intend to give to charity via the QCD option. In fact I see via Googling a link that we don't have to wait for RMDs at 73 to do QCD, and can start at 70.5 years old. https://www.fidelitycharitable.org/guidance/philan...(QCD,taking%20their%20required%20minimum%20distributions.

Because we have kids, and this would be part of what they could potentially inherit, we want to include them in on the decision making process. I envision all 4 of us coming to the table with the our favorite charity and discussing the merits of each, reaching a consensus on where to donate the money in full or part. Because they were part of our frugal LBYM lifestyle that allowed for investment, I feel they should also be part of the donation decision process.

FWIW,

IP

inheriting a Traditional IRA can be somewhat problematic for our kids, ...

Yep, it is especially bad because of human lifespans. If your kids are typically 25-35 years younger than you, then when you die, and they inherit that IRA (that has probably grown faster than RMDs for a decade or two), they will be in their peak earning years and thus at their peak tax rates.

You know all those IRA calculators out there? They usually figure the value of tax deferral by calculating tax savings now, versus average tax when taking distributions. But since it usually isn't all distributed in your lifetime, I think a calculation should be added for the remainder that will be taxed at the heirs MARGINAL income tax rate (not at their average rate). This also changes the equation of "Roth 401k versus Traditional 401k" contributions.

After my kids graduated from college, I did a Roth matching program with each of them(3). Started out at $2500 max (my part) each annually since $5000 was the most you could put into a Roth each year. Later Fed Roth rules changed and it my part went to $3000 max each. They surely were encouraged and took full advantage and enjoyed the FREE money. We continued this matching process for many years. For me it was a method of encouraging each to save for the future and introducing them to investing.

HardwaterRuss

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