If you haven’t sold you have not made anything - it’s just that the market values the asset you hold higher than what you paid for it.
If you did sell you made 25k for storing your previous savings in the stock market
It is a choice you made about what to do with your money
Unrealized gains are gains. Of course it can go down but no one should subtract that number from their wealth. Appreciating assets are what make most people wealthy.
What if the OP sold and immediately bought another asset that had similarly appreciated? What if they sold, changed their mind, and immediately re-bought the same asset? In both these cases the "made" 25K (or somewhat less if we factor in cap gains tax) is in a similarly precarious position to the just-keep-holding case.
Is it the case that to have "made money" you need to take that money permanently out of play? Does that in turn mean then when you invest money that money shouldn't count toward your net worth because it might lose value in the future?
Starting Point: $10k
Annual Contrib: $1k (that's $1k per year)
Years to Grow: 20 years (that's $20k contribution)
Annual Rate: 5% (ETF bloggers says 10%, but let's half that)
Total Value: $61,252.23
Money you put in: $30k ($10k + $20k for 20 years)
Money you get: $31,252.23
So let's say at the 21st year, the stock crashed. The crash needs to be more than 50% in order for you to lose your capital money.
First, I believe you can tell your financial institution if you want to cash out.
Second, by the time you retire, usually you don't put your money in high-risk investment but instead if something more "reliable" so the chance you get hit with 50% lost should be at minimum.
If you retire. You might die before retirement age. Also, by the time you retire you might be too infirm or sick to even enjoy your retirement. Many people also have such a crappy work/life balance that they don't know what to do with themselves when they retire, so they're miserable even when they retire.
I don't understand the negative use-cases from your statements.
"if you retire"
"if you didn't die"
"you maybe too sick"
Are you suggesting not to invest at all because "YOLO, we'll die, or sick-and-die anyway".
Saving money does not mean you have to live below poverty line. It means you have to "live within your means" => "balance in all things". The hardest thing in life is to deal with "change", in this case, "changing your lifestyle". Those who are not used to "live within their means" will absolutely struggle to do so down the line.
Nobody suggest anyone to put away as much money as possible and live miserably. If we go back to the simplify calculation above given the situation where one cannot afford to travel abroad _right now_, investment can help them with that problem! Nobody say not to touch your investment before you retire. You can withdraw occasionally for reasonable splurge.
Do I think it will go down sometime? Yes of course. And I’ve hedged accordingly. But people who are scared to invest are missing a once in a lifetime opportunity.
“Those gains are fiction”
After all, you could have taken that $25k out and spent it on yourself or on a vacation.
A lot of people’s nest eggs are much smaller than they could have been because they choose to do something else with their money, either out of necessity of pleasure.