My Portfolio May Not Recover In 2023. Here’s Why I’m Not Worried

It’s fair to say that 2022 was a pretty rough year for investors. And I would definitely lob myself into that category.

My investment portfolio took a major hit in 2022, partly due to a broad market downturn and partly because I happen to own a lot of tech stocks, which clearly didn’t have a stellar year. In fact, at this point, I’m looking at losses in my brokerage account, my 401(k) plan, and just about everywhere.

The good news is that there’s a chance the stock market will recover in 2023. And if we end up with a bull market rally on our ends, a lot of investors could end up in a much happier place by the end of the year.

But I’m not banking on that happening. There are still a lot of factors that could lead to a volatile market in 2023, like recession fears and the ever-present problem of rampant inflation. So I recognize that there’s a good chance that come this time next year, I may be looking at the same deflated portfolio balance I’m seeing today — or possibly even a lower one. But that’s not something I’m letting myself stress out about. 

It’s all about long-term thinking

The money I have in my 401(k) is money I don’t plan to touch for many years. Heck, I’m not even allowed to touch it without incurring a 10% early withdrawal penalty. Because of that, I won’t let myself get worked up over the fact that my retirement plan has lost value.

In fact, the money I have invested in my brokerage account is also money I’m earmarking for retirement. Granted, I get more flexibility in that I could take a withdrawal tomorrow if I wanted without losing 10% of the sum I remove. But my whole goal in buying stocks is to hold them as long as possible and let them gain as much value as possible. So if my portfolio doesn’t recover this year, it’s no big deal.

I don’t need my portfolio to recover by the end of 2023. I just need it to recover eventually.

The market tends to recover

Another reason I’m staying calm despite the massive hit my portfolio has taken? The stock market has a long history of recovering from downturns. And there’s no reason to think the same thing won’t happen this time around.

That doesn’t mean the market always recovers quickly. It could take several years for stocks to emerge from their slump and reward investors who waited things out patiently. But I’m willing to sit tight.

Keeping calm

I’m not trying to be blasé about the state of the stock market and my portfolio. I want to make it clear that I’m not happy with the losses I’m seeing compared to a year ago.

But I’m also doing my best to stay calm, because panicking won’t get me anywhere — and I don’t think it’s warranted. I have no plans to tap my portfolio anytime soon. I might as well use that to my advantage and help preserve my mental health.

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