Episode Overview

Podcast: Optimal Finance Daily | Host: Diania Merriam
Episode: 3292 – [Part 2] Why You Should Invest, Even in Peak Markets by Chelsea of Smart Money Mamas
Date: September 22, 2025

This episode, narrated by Diania Merriam, dives into the perennial question of whether you should invest when markets are at all-time highs. By sharing data-driven insights from Chelsea of Smart Money Mamas, Diania explores the historical resilience of long-term investing—even in the face of recessions—and emphasizes how discipline and time in the market can outweigh fears of poor timing. Diania also reflects on her own investing philosophy, providing personal insights into managing risk and emotional responses to market volatility.

Key Discussion Points & Insights

1. Lessons from the Great Recession

• Historical Case Study:

  • Investing $10,000 at the S&P 500 peak (10/9/2007) right before the Great Recession.
  • Value dropped by over 50% ($10,000 → $4,322 by March 2009) but fully recovered by August 2013 and continued climbing.

• Takeaway: Despite investing at the “worst” possible time, staying the course led to substantial gains over the long run.

  “By holding steady and recognizing that the market naturally rises over time, you would have recouped your whole investment by August of 2013. By now you would be up over $5,000. Your average annual return would be 4.7% with a total return of 54.7%.”
  — Chelsea (via Diania, 02:57)

2. The Power of Dividends and Reinvestment

• Dividends Matter:

  • Many S&P 500 companies pay dividends, either as cash or via reinvestment into more shares.
  • Reinvesting dividends would have led the hypothetical $10,000 to grow even more:
    • $18,810 over the period for a 6.5% annual return—nearly matching long-term stock market averages (03:29).

• Aggregate Data:

  • Across ten previous U.S. recessions (since 1948), only in one case would a $10,000, non-dividend-reinvested investment have lost money over ten years.
  • On average, even investing at the “peak” before a downturn:
    • Without dividends: $10,000 grows to $21,659 in 10 years (7.1% annual return)
    • With dividends reinvested: $10,000 → $32,906 (11.6% annual return) (04:36–05:13)

• Key Insight:

  • Even the worst-timed investments can yield strong returns over time if dividends are reinvested and investments are left untouched.

  “You would have to fight through seeing your account balance fall through one and sometimes two recessions. But if you did, your money would be worth a whole lot more than if you just buried it in your backyard.”
  — Chelsea (via Diania, 05:23)

3. The Emotional Toll & Generational Lessons

• Millennial Skepticism:

  • Many Millennials experienced formative years during the Great Recession, leading to a skepticism and reluctance to invest.

  “Too many of us have let the memory of the bad keep us from seeing the truth of the good.”
  — Chelsea (via Diania, 05:52)

• Impact of Panic Selling:

  • Emphasizes that only those who “panicked and took their money out of the market in the darkest days of 2008 and 2009… never had a chance to benefit from the strong market recovery.” (06:20)

• Central Advice:

  • “If you can have the discipline to invest for the long term, the sooner you get your money invested in the market, the more wealth you’ll have in the future.” (06:38)

4. Diania’s Reflections: Navigating Risk and Volatility

• Summarized Takeaways:

  • (1) Investing is essential to meet financial goals
  • (2) Accepting some risk is necessary
  • (3) Long-term mindset is critical (08:52)

• Diania’s Coping Strategies with Volatility:

  • Adopts a passive approach, rarely checking market ups and downs:

    “I look at the money I invest like a tax that I’m paying to my future self. I see that money as not really mine, meaning present-day Diania has no claim to it.”
    — Diania Merriam (09:38)

  • Maintains a strong cash position (a year’s worth of expenses) to insulate against short-term needs and avoid dipping into investments.

    “A passive investment style alongside some blissful ignorance and a long-term focus makes the risk of investing much more tolerable for me.”
    — Diania Merriam (09:59)

Notable Quotes & Memorable Moments

• On staying invested through market crashes:

  “If you managed to invest your $10,000 at the exact peak before a downturn and left it invested for 10 years, you would see an average annual return of 7.1% without dividends and 11.6% if you had dividends reinvested.”
  — Chelsea (via Diania, 04:55)

• On learning from past recessions:

  “Our parents’ retirement savings were only decimated if they panicked. If they let that fear settle in and took their money out of the market in the darkest days... they never had a chance to benefit from the strong market recovery over the past eight years.”
  — Chelsea (via Diania, 06:14)

• Diania on emotional separation from invested money:

  “Whether my portfolio is up or down doesn’t really have an effect on me right now and I can happily ignore it.”
  — Diania Merriam (09:41)

Timestamps for Key Segments

• [00:57] — Main episode content begins
• [01:00–03:45] — The Great Recession investment scenario and recovery
• [03:47–05:27] — Data on returns through ten prior recessions
• [05:30–06:39] — Psychological barriers, lessons for Millennials, power of long-term investing
• [08:51–09:59] — Diania’s summary and personal strategies for long-term volatility management

Episode Flow and Utility

This episode masterfully weaves historical data, behavioral insights, and practical strategies, making it highly relevant for anyone anxious about investing at market highs. The consistent message is clear: the market’s long-term upward momentum, especially when harnessing dividend reinvestment and emotional discipline, has repeatedly rewarded patience—even in the wake of severe recessions. Diania’s closing perspectives provide actionable techniques for developing the mindset and structure to invest confidently through inevitable ups and downs.