The Hardest Part of Investing Is This, According to Graham Stephan. And He’s Right

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If you’re like most investors, this may be a struggle. 

Investing money in a brokerage account and buying stocks allows you to grow your wealth when you earn returns. You can actually benefit from compound growth as the money you make on your investments can be reinvested and help you make even more.

Investing the right way can be hard, though, in large part because to do it right requires discipline. If you’re not sure whether you’re up to the task, finance expert and YouTube personality Graham Stephan recently took to Twitter to explain one of the most challenging parts of successful investing. And Stephan is 100% spot on in describing the difficulty so many people face.

But the good news is, there are definitely ways to overcome it so you can benefit from the awesome wealth-building power the stock market offers.

This part of investing can be a real challenge

When it comes to making money in the stock market, there’s one must-do task that seems simple but that can be harder than almost any other aspect of investing. And Graham Stephan explained it perfectly in a simple tweet.

“The hardest part about investing is holding on during the tough times,” Stephan wrote. He also included a chart with his tweet, which showed how often the stock market was in positive territory over set periods of time between 1926 and 2021.

According to Stephan’s chart, the stock market was positive 63.1% of the time in a one-month period. And the percent of the time it was positive just kept going up from there. In fact, when looking at a 20-year period of time, the stock market was actually positive 100% of the time.

Stephan included this chart to show that if you can invest for the long term, downturns inevitably turn into recoveries. As long as you’ve made reasonably sound investments (like buying index funds that track the performance of the market as a whole or buying shares of companies that can stand the test of time), you are going to do well in the market. But that’s only if you keep your money invested for the long term.

As Stephan points out, when the market is going down, it’s very easy to overreact and pull your money out or change your entire investment strategy out of fear that you’re going to lose money. In fact, many people do that because it doesn’t feel good to see your portfolio balance going down — even on paper or a computer screen.

If you can avoid doing that, though, and hold on during tough times, you should make money over a long investment horizon. You just need to overcome your fears and impulse to act and stay the course.

How can you follow Stephan’s advice?

Following Graham Stephan’s advice and holding on during the tough times is a path to success, but if it weren’t challenging everyone would do it.

Here are some tips that can help you stay the course:

Go into every investment planning to hold on: If you only buy assets you’d feel comfortable holding during tough times, you’re less likely to sell in a panic when things appear to be going badly.Develop an investment strategy you’re confident in: If you feel sure of your investments, you are much less likely to make fear-based decisions that cost you money.Step away: You don’t have to check your portfolio every day, or even every week or month. When the market is down, just steer clear of checking your portfolio balance at all so you won’t be tempted to act.Change your mindset: Instead of panicking during tough times, think of a market downturn as an opportunity to buy more stocks since you’re effectively getting them on sale.

By following these tips, this challenge that investors face that Stephan discusses won’t be a problem for you and you’ll be able to build wealth while limiting your risk of loss.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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