The answer is "You Shouldn't". It's that simple. Sorry for the clickbait.
Many investors think that getting out of the market and moving to cash is a viable strategy for avoiding the painful parts of investing: downturns and crashes. In the moment it can hurt to watch your account go down. Not knowing how far your savings will slip before things turn back around is anxiety provoking. It's much more comfortable to "get out" and sit on the sidelines until things don't feel so scary.
That all sounds fine and dandy in theory, but the data shows this strategy is much more damaging to your portfolio than weathering the discomfort of staying invested. Below is a chart that shows just how impactful missing the best days in the market can be for a portfolio. Notice two things:
1. Missing only the 10 best days in the market reduces the overall return by more than 50%.
2. Most of best days in the market all occurred in the middle of the scariest bear markets in recent history (in this case, the Financial Crisis and Covid Crash).
While successfully avoiding the worst days in the market would obviously boost your portfolio's return, it is impossible to predict with accuracy when those will be. And even if you got lucky and timed your sell right - it would be impossible to know when to buy back in in order to not also miss out on the best days. After all, the best days in the market typically occur right next to the worst days, or in the middle of bear markets! You just can't win with market timing. It's not worth sacrificing long-term growth for temporary comfort.
One massive advantage of having a good financial advisor is that they will coach you towards reaching your long-term goals and help you avoid making short-sighted mistakes that will cost you in the long-run. That includes helping you stay out of your own way when the markets get rattled. We can help you with that! Give our office a call or shoot us an email at info@bobbennie.com to get started.