Chances are, your financial plan is one that is well thought out and includes elements of growth as well as financial conservatism. However, it is also an almost-certainty that your wealth management plan also includes stock investments. Retirement accounts, college savings plans, and perhaps even an income portfolio all include stocks in most cases. As a result, all of the recently volatility from the stock market can induce panic.
Don’t give in to fear.
Ignoring Media Panic
One of the biggest reasons that people lose focus is due to media panic. Frenzied reports about a stock market rout and a terrible future tend to make people very nervous. These sensationalized reports often encourage investors to sell their stocks in an irrational panic, locking in losses and missing opportunities.
Instead of paying attention to what the media is saying about the stock market, turn off the TV and evaluate the fundamentals of your investment portfolio. Other than the current, temporary turmoil, is anything different? Are the companies you invest in still good companies? Do they still have competent management? Companies that are fundamentally strong are likely to remain strong, and make it through the tough times. You have to be willing to ride out the storm, and look for opportunities.
Look to the Long Term
Day to day, month to month, and even year to year, a trend line for the stock market can be full of pronounced peaks and valleys. However, that line tends to smooth out over time. The stock market has yet to lose in a given 25-year period. Even if you look at a 15-year or 20-year period of time, things appear much less volatile. Instead of focusing on short-term catastrophes, consider the big picture and the long term. Media types make money off short attention spans and hysteria. Instead of falling for the hype, take a step back and look at your portfolio from the standpoint of your long-term goals. Chances are that your current plan is likely to remain relevant, even through these unsettled times.
Finding Good Help
When the fear instinct kicks in, it can be advantageous to have good help. A family member, trusted investment advisor, or some other person you know can help you remain grounded. Before you make changes based on a knee-jerk reaction, talk it through with someone you trust – and who has a cool head. Your financial future will thank you.