is what investors really do rather than the recommended "buy low, sell high," according to research by the University of
Michigan Retirement Research Center.
"Repeated loud
warnings by financial advisers fail to reverse the human tendency to panic when
the market plunges and to rush in after it’s gone up."
"Withdrawals from
401(k)s and IRAs surged between 2001 and 2003 after high-tech stocks
declined, but the money went back in in 2005 through 2007 after the
S&P500 index had soared nearly 27 percent in 2003 and 9 percent in 2004,
according to new research by Thomas Bridges, a graduate student
in economics, and Professor Frank Stafford, for the University of Michigan
Retirement Research Center. Read the details at the Squared Away Blog:
What to do? Know your risk tolerance (did you panic and sell in 2008-09?), put your investing on auto-pilot and recognize that the stock market (and other investments) can fluctuate radically. Don't invest in stocks if your time horizon is less than 5 years.
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