My Brokerage Account Balance Is Down, but Here's Why That Doesn't Bother Me

It's not an ideal situation, but it's not a troubling one, either.

It's fair to say that 2022 has not been kind to stock market investors. Not only has the market been volatile on a whole, but the tech sector has taken a notable beating this year. And given the popularity of tech stocks, that means a lot of people are seeing losses in their brokerage accounts this year.

I'm one of them. At one point earlier this year, my portfolio was down around 30%. The last time I checked, it was down between 20% and 25%. Now, I'm not going to tell you how much money that translates to because, well, that's a little too personal for the internet. But let's just say it's not a small amount and leave it at that.

Of course, I'm not thrilled about the losses I'm seeing in my brokerage account. But I'm also not panicking for one big reason.

My brokerage account isn't my emergency fund

If my emergency fund were to somehow lose 30% of its value, I'd flip out. After all, it's hard to say when I might need to dip into my savings to cover a home repair, car repair, or series of medical bills.

Plus, financial experts have been sounding warnings about an impending recession -- or something even worse. That's not very comforting. And so I can't discount the possibility of my income taking a serious hit in the near term. In that situation, I'd need my emergency fund to bail me out by helping me cover my bills.

But thankfully, I don't keep my emergency savings invested; I keep that money in the bank. And so the amount of my emergency fund won't go down unless I actively initiate a withdrawal.

My brokerage account is a different story. I could put $20,000 into that account only to watch my balance shrink to $15,000 overnight due to stock market volatility. But that's why I'm willing to accept a much lower return on my emergency fund in my savings account -- I want that balance protected so I can tap it when I need it.

That's also why the losses I'm seeing in my brokerage account aren't so bothersome to me. I have that money earmarked for retirement, which is still a ways in the future for me. That gives my portfolio many years to recover.

And also, the losses I'm seeing in my brokerage account are really only hypothetical because I haven't gone off and sold anything this year. And it doesn't make sense to panic over a hypothetical situation in my mind.

Play it safe with your emergency fund

Trust me when I say that I'd love to generate a higher return on my emergency fund than what my savings account gives me. But I also want that money protected. And that's why investing it is a poor choice.

I'm okay with investing the funds in my brokerage account because it's not money I would expect to need in the near term. And so I'm able to cope with this year's stock market events -- even though I'm definitely not thrilled with the losses I'm seeing.