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Lessons from a Bear Market

At the end of 2021, I was confident I would have enough money to be fully retired by the end of 2023. That was right about at the height of the market.

Little did I know that over the next 9 months, the value of my investments would drop from a high of 109.00 USD to a low of 78.88 USD per share that September. This meant that the resale value of the majority of my portfolio had dropped by 27.6%. Needless to say, I'm not retired yet.


What did I do? Well, not much. I still invested my savings on schedule as planned. I still did my daily routines. I didn't spend much time thinking about the market truthfully. However, I did put my early retirement planning on hold for a bit, and I spent more time focusing on the present (which is generally a good idea, even when the market is up).


Since September 2022 my shares of VT have regained market value of 91.78 USD, which is still down 15.8% from that all time high, but not quite as bad as it was. Nonetheless I am not afraid. You see, the market value of my shares is not the same thing as the actual value of my portfolio. I never lost any shares, I just lost market value.


This is similar to owning a house while the market price goes up and down with the overall housing market. But it doesn't matter unless you're selling. If you're selling your house in 2009 at the bottom of the housing market bust then you will realise those loses. But if you didn't sell, you still have the house. And slowly, over time, the market value of your house will grow again. Sure, it may not get to those pre-housing crisis Dubai highs again, but that value was never real either (unless you were selling at the time).


The only market value that is truly real is the price of the shares when you're buying them, or the price of the shares when you're selling. If you just hold on to them, you still have them. You didn't lose (or gain) anything.


When the market is high, I have to pay more for each share of VT that I buy. When the market is low, I get to buy even more shares for the same amount of money. Stocks on sale! So this crash is actually pretty good for me because I'm still earning money and can take advantage of the relatively low price of stocks.


The delay in my full retirement has also allowed me to start living a Slowfi lifestyle: where I start choosing the way I want to live right now, without waiting to be retired to be who I want to be. Instead of just pushing hard and hustling to get to FI sooner, I'm enjoying the ride. You see, I will hit my FI number soon anyway, even with this short delay. But when I get there, I might not change much because I'm already doing what I love.


By the way, I have only ever once (the bottom of the 2020 crash) seen the market value of my investments drop below my original investment--and that was only for a very short moment. Because I've been investing for a little over 6 years now, even with the 27.6% drop, I still could have sold my shares for more than I bought them for. When I first started investing I was buying VT for around 60 USD a share, so the earliest shares I bought had still gained significant market value at the bottom of 2022. Time in the market is key. The longer you hold your investments the more they will be worth (assuming you're invested in low cost index funds).


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