BCYP

Big Cypress Acquisition Corp.

8.44
USD
-19.23%
8.44
USD
-19.23%
8.21 12.90
52 weeks
52 weeks

Mkt Cap 124.85M

Shares Out 14.79M

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Brokerage Account Balance Down? Don't Make This Mistake

If you've been following the news, you may be aware that the stock market has been in a serious slump for much of 2022. In fact, the past five months have been riddled with intense volatility, so much so that even seasoned investors are getting spooked. If you're new to investing, you may be growing increasingly nervous about your shrinking brokerage account balance by the day. And even if you've been an investor for many years, seeing a decline in your portfolio can be extremely upsetting and unsettling. You may, in fact, be thinking of dumping some of your stocks to minimize the financial hit. But that's a mistake that could really end up costing you. Don't rush to sell off investments Imagine your brokerage account balance was $10,000 at the start of the year, and now, it's down to $8,200. On screen, that looks like an $1,800 loss. But in reality, it's not a loss at all. Rather, it's a hypothetical loss. And if you sit back and avoid selling off investments when they're down, your actual loss might amount to nothing. The stock market has a long history of recovering from downturns and rewarding investors who stick with it. If you're seeing your $10,000 brokerage account balance whittled down to $8,200, it doesn't mean you've actually lost $1,800. And if you sit tight and wait for the market to recover, your balance might gradually work its way back up to $10,000. Now to be fair, we don't know how long it will take for stock values to recover. You could end up waiting weeks or months for your brokerage account balance to climb back up. And that may not even happen this year. But one thing's for sure -- if you unload investments while they're down, you'll guarantee yourself actual losses. In our example, liquidating your entire portfolio will mean losing out on $1,800. But if you do nothing, your portfolio might be worth $10,000 or more come this time next year. Invest with caution Investing money is a great way to grow it into a larger sum over time. But one thing you shouldn't do is invest funds you expect to need within a few years. If you do that, and the market tanks, you could end up in a real jam. So, let's say you're hoping to buy a home in the next three years. You shouldn't keep your down payment funds invested in a brokerage account. Rather, you should stick to a savings account, where your balance won't shrink unless you take a withdrawal. Similarly, your emergency fund should be tucked away in the bank. But if you have money you don't expect to need for many years, then investing it in a brokerage account is a good bet. That may mean enduring periods of volatility many times over. But if you do your best to keep your cool when investment values drop, you'll set yourself up to avoid actual losses and instead come out a winner. Score up to $600 with this top brokerage account Using the wrong brokerage account could cost you serious money -- and that's especially true if you're missing out on big cash bonuses and rewards programs now being offered. This stock brokerage is a top pick according to our independent experts, and can be a lucrative option for both beginners or more advanced investors alike. We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. 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.Maurie Backman 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. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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