A few years ago, I was hiring for one of the most important jobs I would ever need.
This job had the power to bankrupt me or make me a multimillionaire.
I therefore took the hiring process very seriously. I wanted to vet every single candidate. My future was at stake.
You see, I was looking for the best way to accumulate and grow my money. I wanted to put my dollars to work, and it was time to hire. I was young and had decades ahead of me, so I was hiring for the long-term.
I started off seeking out all the different candidates who could help me grow my money: there was Mrs. Bank Interest, Ms. CD, Mr. High-Yield Savings, Ms. Treasury Bill, and Mrs. Bond.
I quickly dismissed these candidates as what they were bringing to the table in terms of interest and rate of return was not enticing enough. Sure, these candidates might be well-suited if I were closer to retirement, but given my time horizon, I thought I could do better.
I spoke with Mr. Stock and Ms. Mutual Fund next. They certainly offered a high rate of return, but I was turned off by the lack of diversification offered by Mr. Stock, and by the high fees that came along with Ms. Mutual Fund’s offerings.
There was one candidate remaining: Mrs. Index Fund. When she walked into my office, she carried herself with a sense of ease and confidence.
I started questioning her right away:
“Mrs. Index Fund, what are you all about?”
“Well, I offer the diversification of a mutual fund without the high expense ratios.”
“English, please,” I said.
“Look, I can make sure that when it comes to your money, your eggs aren’t all in one basket. I will spread your money out over various stock investments. Also, I don’t charge you all those preposterous fees that you would pay to Ms. Mutual Fund. We’re all about passive investing. We don’t day-trade. We don’t have a team of analysts. We track to an already-existing index. It’s super easy and automated.”
“Well, Mrs. Index Fund, your returns can’t possibly be as good, then.”
“Actually, studies have shown that I do just as well as, if not better than, Ms. Mutual Fund over the long-term. You can expect an 8–10% return over the long run,” said Mrs. Index Fund.
“Wow! I’m impressed. What am I missing?”
“There is one thing,” Mrs. Index Fund started. I tensed up, waiting for it. “You have to hire me for the long run. I don’t work in 1- or 5-year contracts. I’m best at what I do for 10 to 20 years. Are you willing to commit to that?”
“Well, sure, I’m young and I have a lot of time before retirement,” I replied.
“I’m not sure you understand fully,” said Mrs. Index Fund. “I can get you an 8–10% return over the long run, but on a year-to-year basis I really can’t promise anything. In fact, some years, you can and will lose money if you hire me.”
“Lose money? Well, why can’t I hire you for just the years in which my money will grow? I don’t want to lose money!”
“Unfortunately, because of the nature of my work, I can’t predict which years you will lose money. But the thing is, I will always make you a great return in the long run. But you have to be willing to accept those losses in the short run. With the good comes the bad. That’s the deal. Take it or leave it.”
Mrs. Index Fund certainly drove a hard bargain. I thought about losing money during certain years. If I was near retirement, that would be a deal breaker for me. But since I was young and had decades until retirement, I had time to bounce back from those short-term losses.
As I mulled this over, Mrs. Index Fund handed me her resume. I looked at her performance over the long run. And sure enough, for every bad year, whether it was the oil crisis or the dotcom bubble or the housing market recession or the Covid-19 bear market, Mrs. Index Fund more than made up for that in all the other years. The long-term trend was always up, up, up, just like she said.
I certainly didn’t have any other candidate with such a strong resume and background. I decided to commit.
“Let’s do it,” I said. We shook on it.
That was years ago. And the details of our conversation have long-since been forgotten.
Now, it’s 2022, and I’ve never been so scared. We are officially in a bear market. The pandemic hasn’t let up, with multiple variants of the Coronavirus rippling through the world. Interest rates are increasing, the housing market is a mess, and inflation is at an all-time high.
Everywhere I turn, I see scary headlines. There is political unrest everywhere; relationships have been lost; loved ones are turning away from one another. I am frightened and I don’t know what to do.
To add insult to injury, my stock portfolio is in the gutter. And that’s the final straw.
Mrs. Index Fund has not been doing her job well. I’ve lost thousands and thousands of dollars. In fact, I’m so utterly angry and upset that I decide to go to her immediately and fire her. I’m not going to let her lose any more of my hard-earned money. It’s time to take my money away from Mrs. Index Fund and hire someone else. At least this I can control.
I knock on her door, ready to break our contract.
She opens it, takes in my wild expression, and smiles calmly.
“I’ve been expecting you,” she says.
“Oh, I’m sure you have!” I reply curtly. I sit down. “Listen, this isn’t working anymore. You’re not doing your job.”
“Oh, but I am,” Mrs. Index Fund replies.
“With all due respect, ma’am, I have lost thousands of dollars because of you. How can you sit there and tell me you’re doing your job?”
“My friend, it’s been years since you hired me and we had our initial conversation, so might I remind you of a few things?” says Mrs. Index Fund. “I told you from the get go that I don’t work in short contracts, right?”
“And that I can only give you an 8–10% return over the long run, right?”
“And that some years, you will lose money?”
“Well, now that you mention it, yes.”
“Do I need to show you my resume again? Last time, you saw how although I may have a bad year, in the long run I always hold up my end of the deal,” Mrs. Index Fund says. “And now it’s time you hold up your end of the deal and see this through. Breaking our contract early will ensure loss. And I’m sure you don’t want that.”
“No, I don’t,” I say.
“Trust me on this one. Fire me and you’ll regret it. Stick with me and you’ll be happy you did.”
“Alright, fine. I’ll hold up my end of the deal. But if you’re wrong, then we are through,” I say reluctantly. I’m unsure if I’m making the right decision.
“It will all be okay, my friend. I promise,” says Mrs. Index Fund.
This conversation replays itself over and over again during the next few weeks and months. I feel as though every single day presents a new rollercoaster of emotions: anger, shame, fear, hope, sadness, and guilt. Every time I lose my cool and consider firing Mrs. Index Fund, she reassures me and reminds me of the long-term nature of our contract.
I don’t know if I can trust her, and many times I come close to terminating our relationship, but something in me stops. And as scary as it feels, I decide to see it through… for better or worse.
I stop checking on my portfolio every day and instead focus my efforts and emotions on helping out a family member, friend, or neighbor. We must rely on and help one another during these dark times. We are only as strong as our community. This shift in mindset helps me distract myself from checking my stock portfolio five times a day.
I can make it. I can make it. This is only temporary. We will get through this.
Fast forward to several years later. I’m sitting on a park bench, the sun warming my back. Yesterday, I checked on my stock portfolio, as I now do once or twice a year, under the guidance of Mrs. Index Fund.
It has not only bounced back from the lows of 2022, but it is up higher than I ever could have imagined. Mrs. Index Fund has certainly kept her word of 8–10% returns (much, much more, in fact)!
Phew, have we come a long way. I laugh now when I think about how I was almost going to fire her! What an absolute mistake that would have been. If I had fired Mrs. Index Fund in 2022, I would have lost all that money. Instead, I trusted her, and I’m so glad I did.
Those months were scary and my feelings were valid, no doubt about it. Retrospect is a funny thing. I can not only validate my fears but I can see that they were unfounded. I needed to trust in Mrs. Index Fund and the long-term return she promised me. There was no reason to be scared after all.
And now that I’ve lived through this, I know it will happen again. Maybe in 5, 10, 15 years. It’s not a matter of if the market will go down, it’s a matter of when. And now I know to gut it out. Time in the market beats timing the market.
In fact, the next time there’s a downturn, it would probably be a good idea to even pay Mrs. Index Fund a bonus!
Because this is what I know to be true: if I am loyal to her, she will be loyal to me.
This article was previously published on and adapted from a Medium article written by Mrs. Richards in 2020.
Rachel Richards retired at age 27 and now lives off over $20,000 per month in passive income. She is the bestselling author of two books on financial literacy. She is a real estate investor and a former financial advisor.