I just got a notification in my newsfeed that American stocks are officially in a “bear market.” If you haven’t heard the terms “bear market” and “bull market,” they ￼are used as context to what’s happening in the stock market. A bear market is when stock prices fall and a bull market is when prices go up.
More specifically, a bear market describes any stock index or individual stock that drops 20% or more from its recent highs. A bull market, on the other hand, typically rises 20% from recent bear market lows and reaches record benchmark highs.
The fact that stocks are in a bear market is not good news for me. About three-quarters of my retirement nest egg is invested in the stock market via 401(k) accounts and IRAs, which are essentially retirement vehicles.
During your working (income producing) years, you can put aside money, tax-free (i.e., before payroll taxes are withheld) and invest that money into these retirement accounts, most of which is invested in stocks and bonds. And, if the stock and bond markets go up, the value of your retirement nest egg goes up, too. Yay!
But when it’s a bear market, your retirement funds shrink considerably, potentially putting into jeopardy, the comfortable retirement lifestyle you works so hard to achieve.
I just checked my specific accounts and the news is not great. I’m not quite ready to panic, cash out all of my retirement funds, and stuff it all in a mattress. But if this bear market doesn’t go bull soon, I may have to give that some serious consideration.