Jan 24
A Rough January Doesn’t Mean A Lost Year
1 — How much of the picture is on the page?
Returns since the beginning of January are not great.
Still, the S&P has returned >200% the last 10 years, >90% the last 5 years, >60% the last 3 years, and >12% the last year (including the 10% decline since Jan 1). (Source: Koyfin)
Clearly, it’s not all bad — especially if you zoom out.
2 — Who stands to gain from these panic headlines?
ALWAYS ask this before you react to outside pressure.
Media firms are fully aware of the data above, yet they still choose to post headlines like “Investors Face Reckoning as Stock Market Has Worst Week Since Beginning of Pandemic.”
Media firms are businesses and volatile market cycles are huge opportunities to sell news.
They are making money on your panic.
3 — Do market movements have a true impact on my wealth?
Withdrawing cash or moving to cash in the middle of a long-term investment plan is like unbuckling your seat beat in the middle of a roller coaster ride, simply because you got scared. (Note: Don’t do this.)
At that point you will “realize” the current value of your investments (“realize” = no matter what they were worth before, they will now be “really” worth the price at which you withdraw them).
If you set up a plan for the long-term, stay buckled.
4 — What happens next?
“If you don’t know who you are, the market is an expensive place to find out.”
You can’t predict or control what will happen in the market.
You can, however, control how well your investments are aligned with your financial goals.
In order to have clarity and confidence for unpredictable market storms, you need to be financially aligned with:
- What You Value Most — Yeah, FOMO is cool, but do you care about what you’re invested in?
- What You Need Now, Next and Later — Financial security begins with NOW and then builds forward.
- What You Want to Accomplish With Your Wealth — Being rich does not automatically lead to finding fulfillment.
If the latest market movements have made you uneasy, go back and look for areas that might need to be realigned.
This post was created with Typeshare
