15 Reasons Not to Pull Your Money Out of the Stock Market Right Now

These days, it seems inflation is all investors can talk about. It’s no secret that inflation can have a mixed impact on stocks and the stock market as a whole. Generally speaking, value stocks typically fare well when inflation is high, whereas growth stocks usually struggle during these periods.

Certain stocks see share prices plummet, while others spike to nosebleed valuations. In short, the market tends to be turbulent in inflationary environments, just as we’re seeing right now. Inflation can also have a deleterious effect on some corporations’ balance sheets as the cost of doing business surges, while other companies see the reverse impact.

One thing that becomes especially apparent during inflationary periods is that the value of your money -- and often, how much you can buy with the money you have -- drops. The value of the U.S. dollar has been steadily on the downswing for a long time. For example, $1 in 1950 would have the same purchasing power of more than $11 today.

But if you’re thinking about pulling your money out of the stock market altogether, that could be a costly mistake. One of the best ways to protect your hard-earned money in a wide range of economic environments is to invest in the stock market.

While certain portions of your portfolio might see near-term declines when inflation is high, maintaining a diversified basket of investments can actually help you to protect your assets from excessive volatility and make the most of the cash you have.

On that note, let’s take a look at 15 compelling reasons not to pull your money out of the stock market right now and what long-term investors should be focusing on instead.

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One of the most obvious reasons why you shouldn’t rush to sell your stocks is because you are very likely to lose money. Even excluding the strong possibility that you'll sell at a loss, the rest of your portfolio could be severely weakened and face a tough uphill battle to its recovery when the market does eventually right itself.

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Your portfolio’s performance in the current inflationary period isn’t an indication of how it can and will perform in a few weeks, months, or years. If you’re thinking about selling off some of your holdings, consider whether the premise underpinning your investment in the company or companies has shifted, or if you’re just feeling particularly antsy because of the volatility rocking many stocks right now.

If the answer is no to the former and yes to the latter, try to remember that volatility in the stock market is normal and doesn’t last forever. And if you’re concerned that your portfolio is especially vulnerable in this current inflationary period, consider investing in some stocks and stock sectors that historically deliver stable returns during these windows in the market.

When you pull your money out of the market and sell even some of your stocks at a loss, you’ll have not only less cash than you started with but also less to use down the road if you decide to jump back into investing.

If one of the main reasons you’re thinking about cashing out your stocks is because you’re afraid of losing money -- joining the market sell-off is the last thing you should do. Instead, it’s better to sit back and wait out the volatility if you’re not keen to buy more stocks in the current market environment.

The stock market is cyclical. It experiences periods of volatility, calm, and everything in between.

Let’s say you were to pull your money out of the stock market today. We already know that the probable scenario will likely involve you selling at some level of a loss.

In addition, when the market inevitably calms down and beaten-down stocks rebound, you could decide you want to get back into investing. The trouble is, you’ll not only likely have less investment capital to work with than you did before, but you could easily end up paying a new premium for your favorite companies because stock prices will have shot back up -- gains you missed out on by pulling your investments.

There’s no rule book that says you need to invest more money into stocks right now if you’re not comfortable, emotions are too high, or you simply lack the spare cash to do so -- just don’t make a rash investment decision in the heat of the moment that you might very well regret later.

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The decision to sell your stocks because emotions are high and share prices have temporarily fallen could come at significant long-term cost to your portfolio.

Even the most seasoned of investors will see fluctuation in their portfolios as the years go by. But long-term investors who invest consistently despite short-term ups and downs in the market can achieve sustainable returns and build wealth over time.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

If you jump to sell your stocks because you’re worried about inflation or another market crash -- unless you desperately need the cash or no longer believe the stock is a quality long-term investment -- you will almost certainly regret it later.

Emotion-based stock buying decisions can run the full spectrum of motivations from fear to greed. Neither sentiment will serve you well in the long run or aid you in your investing journey.

Rather than cashing out of the stock market, if you have the available liquidity, now is a prime time to scoop up more high-quality stocks that can balance out your portfolio in these turbulent market times and offer resilience if the market plummets again.

ALSO READ: 3 Stocks I'd Buy if the Market Crashes

It’s natural to feel less than thrilled if your portfolio takes a dip when the market turns volatile. But share price is never the sole indicator you should use to assess whether a company is a great buy or not, and even the best stocks take a hit sometimes during inflationary periods.

You know the old saying, “What goes up must come down.” This aptly sums up the cyclical nature of the stock market. And history has shown investors that, following periods of downturn, the market tends to rebound stronger than ever.

If you cash out some of your holdings and another market crash happens, your portfolio could be far less equipped to stay resilient in the volatility that accompanies a downturn. Instead, you should use this time to buy stocks that can gear up your portfolio for the next time the market tumbles.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

One of the many reasons people choose to invest in the stock market is to save for retirement. There are a wide variety of ways you can boost your retirement savings, but doing a complete overhaul of your portfolio by cashing out most or all of your stocks because the market has hit a rough patch won’t help you accomplish this goal.

If some of your favorite stocks have marked share price declines in recent weeks as inflation continues, you’re definitely not alone. But, you could miss on some notable portfolio returns when beaten-down stock sectors rebound if you do a knee-jerk sell-off now.

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When you view a stock purchase through the lens of years rather than weeks or months of ownership, you can more easily stay focused on your long-term investment objectives through the short-term peaks and dips in the market.

The stock market most likely won’t make you rich overnight. During your investing journey, you will inevitably see the prices of your holdings fluctuate in line with broader market shifts.

Rather than making spur-of-the-moment investing decisions when the market experiences a few bumpy weeks or months, concentrate instead on building portfolio value through long-term investment returns.

When the market is highly volatile and investor fear is rampant in anticipation of another crash or correction -- as is currently the case -- you might see the price of some of your favorite companies spike or decline. Remember, these movements are normal and part of the investing journey, and high-quality investments eventually recover from rough patches.

Unless you really need the cash in hand, these market fluctuations shouldn’t compel you to dash to sell off your stocks.

ALSO READ: Buy These 3 Stocks Before Another Market Dip

If you have the extra cash readily available, don’t be afraid to capitalize on the abundance of hot stocks for long-term investors to buy right now. There are opportunities for shrewd investors to seize in any market environment, and this current inflationary period is no exception.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Building wealth through the stock market doesn’t have to be complicated. It doesn’t require insane investing chops nor does it require some super-secret level of knowledge.

Rather than approaching the stock market like a game of luck and leveraging flawed predictions about market timing to decide whether to buy or sell stocks, successful investors maintain a consistent pattern of buying and holding high-quality stocks for years as a means of gradually creating and maintaining wealth.

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