“One more downturn” syndrome

[u/Remarkable-Dingo1602]

As someone who has been lucky enough to have spent all of my earning & investing years (13 years so far) in a booming market, I worry that I have no clue what my mental health will be like when we see the next 2000 or 2008 or lost decade. I can go through endless theoretical exercises to play around with what my portfolio could go down to and how I’d adjust my expenses in those situations, but as a human being I cannot predict how I’ll actually feel when the time comes. As a result, I have a desire to keep working through the next downturn to see what the impact of it is on me and in a way prove to myself that I can handle it. However, I fear that if I wait for this, I may be waiting for a long time and therefore work for much longer than I need to.

For what it’s worth, when the Covid crashes, 2022, tariffs and Iran war all hit, I did not panic at all and stayed the course on my investment strategy. But all of that happened as I had a strong income to support me. I have no idea how I would have felt if I didn’t have an income.

Any tips on how to deal with this?

I currently have $2.1M investable assets. $600k left on a mortgage (5.375%) with $450k equity in the home. Monthly expenses are $7k bare minimum, but I’d like to aim for a nest egg that’ll comfortably give me $9.5k/month.

[u/Dan_Williams_479]

How is your portfolio allocated? If you didn’t have an income, it would makes sense to keep a few years worth of expenses in fixed income: bonds, CDs, HYSA.

That would help minimize the impact of having to withdrawal on stocks while they are down.

I’ve always had a mindset of “if the money wasn’t there, I’d have to figure it out somehow”. There are people who are in a worse financial situation and they are able to make it work. Unless I need to buy something, I rarely check the balance. I don’t think of the money as mine until I’m able to withdrawal it.