Staying Calm is Key to Good Money Decisions Right Now
Hi y’all. How are you? I’m virtually hugging you. I’m not going to take up much of your time today, but as your new Financial Goddess (a title I’m sure you were about to bestow upon me), I want to take a moment to address your fears regarding the stock market, global economies, and how it affects your accounts.
If you have any sort of retirement plan, I’m sure you’re wondering what to do, what not to do, and what you can expect over the coming months.
Here’s what I’ll tell you. Remain calm. No good money decision was ever made out of panic. The markets will likely be volatile in the coming days, weeks, months. You need to know your risk tolerance. What does that mean? Think of it this way, can you withstand the roller coaster (stock market) without throwing up (panicking or making rash decisions)? Or do you need be on a more conservative ride? If you are unsure, talk to a fee-only financial planner who can help survey your risk tolerance. Or check out this Morningstar Risk Tolerance Questionnaire. Be honest with yourself, can you handle major swings in the markets and still sleep at night?
Another thing to consider is your age and the amount of years you anticipate you’ll be investing, also known as your “time horizon”. The younger you are, you generally have room to be more aggressive. Of course, there are exceptions to every rule so please do your due diligence before moving large chunks of your portfolio.
Do not try to “time the market”. You cannot accurately and consistently guess the best times to buy and sell. This is a losing strategy. Actually, it’s not a strategy at all, it’s gambling. The best thing you can do is set long-term goals that are specific, measurable, attainable, realistic, and time-based (SMART). Once your goals are set, and your risk tolerance is taken into account, you can then make decisions upon which investments are most appropriate for you.
I know this country is split literally 50-50. I know we’re united in our anger (albeit anger for different reasons). I’m no better than you. I don’t know how to fix this divided nation. The most intelligent minds will continue to analyze this election for years to come. I learned a really hard lesson recently that I think might apply to all of us. I came to the harsh realization I listen only to respond and not to understand. I found myself doing this in one-on-one conversations and online interactions alike. My sister, who is way more woke than I, brought this to my attention. I promise you I will try harder to listen and understand in order to learn, grow, and progress. I believe this is how I can personally cultivate a sense of healing and love among my neighbors, friends, family, and people I’ve yet to meet. Will you join me?