Should You Be Worried?
As I’m writing this the DOW and the S&P 500 are both down for the year. The NASDAQ is about break-even. How are you feeling? A little nervous? Calm? Don’t care (or didn’t realize the markets were bouncing around)? All are perfectly reasonable reactions- even not knowing. Sometime being too tuned-in can be worse than being tuned-out.
Should you be concerned about what’s going on? If you would, please answer these Yes or No questions for yourself:
• You don’t need any of your invested money (not savings or checking accounts, CDs, money market accounts) in the next 3-5 years.
• If you are retired, you have cash available to cover your expenses (net of pensions and Social Security) for the next 2 years or so.
• You have enough emergency money put away to handle a several thousand dollar “emergency” home or auto repair, medical bill, etc.
• Your investments are allocated based on your risk tolerance (ability to sleep at night), risk capacity (you could afford the losses you might sustain with the portfolio), and the needed return to achieve your goals.
• You look at your statements quarterly or semi-annually, read the business news, but don’t watch the daily stock market shows.
• You and your spouse/partner are still comfortable talking about your investments and where things stand.
• You and your spouse/partner understand and are comfortable with how your investments have been allocated.
If you answered “yes” to all of them, you probably don’t have much to worry about and shouldn’t be worrying. A “no” answer to one or a few probably means you have some work to do. It may be:
• Changing your perspective (from short-term to long-term)
• Becoming clearer about your goals (what you’re investing for)
• Taking a more active approach in organizing your investments (instead of hoping and praying it’ll work out)
• Changing habits (less “talking head” TV or worrying about daily market fluctuations).
Investing is like a marathon, not a sprint. There are going to be uphill climbs that slow you down and downhill sections that feel easy as can be. But in the end it’s finishing the long distance that matters. Few of us have investment horizons less than 10-20 years (unless you’re turning 100 this year) - so a 3, 6, 12 month stretch of volatility is not likely to stop you from finishing in good shape. Panicking takes energy and distracts you from doing what you should be doing.
If you have things in good order – relax. If you have some things to work on – get to them. Do it yourself or get some professional help from someone like me. We can’t control the market, but we can control how we interact with it. Folks who focus on what they can control versus what they can’t tend to be happier, healthier, and wealthier. That should be you.
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