Every year, right about the time the leaves start to turn and kids head back to school, the headlines start rolling out: “Brace yourself, the September Effect is here.” For decades, September has carried the reputation as the worst month for stock market performance. Historically, the S&P 500 has stumbled more often than it has soared in September.
But let me share a perspective that may surprise you: The so-called “September Effect” matters a lot less than you think.
Yes, data shows September has historically been a softer month for stocks. But we’re not building our retirement plans on what the market does in any given 30-day stretch. Investing based on a calendar quirk is a little like refusing to mow the lawn in July, because you once hit a rock that month. There may be a sliver of truth, but it doesn’t provide a framework for making good decisions.
Read Next: Here’s How to Maximize VA Benefits over Your Lifetime
I can tell you, from decades in this business, that obsessing over a month, a week or even a year can throw you off course. What matters far more is whether you have a solid plan with alignment between the timeframe of your goals and where you deploy your dollars.
Here’s the real key: You should never invest money for short-term goals like money for long-term goals. If you know you’ll need the money soon, put it somewhere safe. If your goal is decades away, let time and compounding work their magic.
Take me, for example. I’ve already set aside funds for a blowout retirement trip in early 2026. That money isn’t in stocks, bonds or some other big-return potential investment. It’s sitting in a plain old savings account. Why? Because I don’t want market volatility turning my celebration into a bake-at-home pizza and movie night. For that short-term goal, I want certainty, not risk.
On the other hand, the money I’m earmarking for my later retirement years — way, I hope, down the road — has no business sitting in a savings account. Inflation would eat it alive. That’s where stocks, bonds and a diversified portfolio come in, giving growth a chance to outpace rising costs.
The temptation to act on short-term headlines is strong. Market dips, media buzzes — suddenly September feels like the enemy. But zoom out, and you’ll see that the long-term trajectory of markets has overwhelmingly been up. Historically, the S&P 500 has averaged about 10% annually over nearly a century. A single September slump doesn’t erase that.
Life is full of lessons. The first stock I bought, I sold too quickly when things turned south. Looking back, if I had just held on, the outcome would have been dramatically different. That lesson — don’t let short-term turbulence dictate long-term plans — has stuck with me ever since.
So how do you keep yourself from being rattled by seasonal market myths? Build your plan on a foundation that works year-round:
- Short-term goals (1-3 years): Use savings accounts, certificates of deposit (CDs) or short-term bonds. Think permanent change-of-station (PCS) moves, tuition, vacations or, yes — even retirement blowout trips.
- Medium-term goals (3-10 years): Consider a mix of cash, bonds and stock investments to balance safety with growth.
- Long-term goals (10+ years): Here’s where stocks and a diversified approach shine. You’ve got time to weather storms, whether they show up in September or any other month.
Aligning your money with the timeline of your goals ensures you don’t have to panic when the market hiccups. You’ll know the funds for next year’s needs are safe, while the funds for decades-away goals are growing.
The September Effect makes for catchy headlines, but it shouldn’t dictate your financial behavior. A smart framework, built on aligning goals with time horizons, is far more powerful than worrying about a calendar anomaly.
So, when you see those “September jitters” stories, take a breath. Your financial security isn’t determined by a month; it’s determined by the plan you’ve put in place and the discipline to stick with it.
And if you happen to run into me in early 2026, hopefully I’ll be celebrating that retirement trip in style — not with frozen pizza and a rented movie, but with memories I’ve been planning (and saving safely) for years.
Get the Latest Financial Tips
Whether you’re trying to balance your budget, build up your credit, select a good life insurance program or are gearing up for a home purchase, Military.com has you covered. Subscribe to Military.com and get the latest military benefit updates and tips delivered straight to your inbox.
Story Continues
Read the full article here