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Should I pull out money from the stock market?

With high inflation and a crisis in regional banks, a lot of aspiring millionaires are moving their money from the stock market and rushing into savings accounts, money market funds, bonds, and so on.  I can see the rationale.  It is better to get a reliable rate of return than to witness the losses that may keep happening for a year or two in case we see a recession as the Federal Reserve fights inflation.  At least, it will help you sleep better at night, and trust me, I am a big believer in sleeping well (it has tremendous health benefits).

Here is a thing to remember, particularly if you are young and do not need access to your funds in the near future.  Look at the chart below (courtesy of CNBC which used data from Bank of America and S&P).

Image showing that timing does not work when investing in the stock market.

As you can see above, if you miss the best 10 days over a decade, your return is just 28% (column 4).  On the other hand if you did absolutely nothing, your return is as high as 17,715% (column 2).  Of course if you can time the market and avoid the worst days (you will be a genius to be able to do that and almost no one on Wall Street is over such a long period), your returns will be astronomically high (column 3).

The conclusion is that the stock market volatility might be a bit unnerving, but think of it as a feature of investing, and not a bug.  Remember I always talk about the value of discipline and patience if you want to get rich.