When others panic, keep the faith in long-term investing
Today’s headline writers must have put all their money in at the height of the market. The financial press is flailing in a roiling hurricane of panic, confusion and regret. The future, if we buy into the headlines, is scary and most likely ruinous. At a minimum, they seem to say, there’ll be no joy on our statements for some time.
But there are some investors who gracefully float above all the carnage. They might take note of it, but they aren’t panicking. They aren’t panicking because they were prepared. Their fortunes and happiness don’t depend on a few daily market moves, and they are prepared, at least as much as they can be, for the curveballs that life occasionally throws at us. The markets may be doing the jitterbug, but their plans aren’t. And, if you want it enough, you can be one of them in the next market cycle. With that in mind, let’s look at what those calm people are doing right.
Build wealth instead of chasing heights
It’s terrific to triple your money, but it accomplishes nothing if the next trade reverses it. Thoughtful investors don’t simply buy volatility and hope it works out. Instead, they focus on consistent growth.
Yes, they’re willing to accept some declines to position themselves for higher returns, but they lean toward slow and steady instead of dramatic, but temporary highs. They don’t put all their money into the meme stock of the moment. They diversify across asset classes, sectors, maturities, investment styles and market caps. They have faith in long-term investing, but not as much in an ability to time markets.
Insure against disasters
My clients tell me retirement is wonderful. It’s also foreseeable. You can flip your calendar ahead and choose a retirement date. Sometimes, life taps people on the shoulder and tells them it’s time to retire. Thoughtful people plan for it. They think of what they want to do, estimate how much it will cost and set the money aside. They do the same with future college expenses, roofs that will need to be replaced and cars that break down.
They’re also smart enough to separate their safe money from their long-term money. Safe money needs to be available at any time without any surprises. They understand that their safe money may not earn the same high returns as their long-term money, but that comfort helps them give the long-term money time enough to earn those long-term returns that will fund their goals.
There are some life events that are both expensive and impossible to time, and that’s what insurance is for. Careful people insulate themselves from what’s out of their control, so they can devote more time and energy to what they can manage. But they only buy as much insurance as they need, because they understand the difference between insuring and investing.
Patience pays dividends. You don’t need to be an expert in planning to reap the benefits of planning ahead. You just need to have a plan and follow it. Speculating is exciting, but the payoff can be fleeting. Achieving goals is far more fulfilling.
Evan R. Guido is the founder of Aksala Wealth Advisors LLC, a 2018 Forbes Next-Gen Advisors List Member, and Financial Professional at Avantax Investment ServicesSM. Evan heads a team of retirement transition strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 or firstname.lastname@example.org. Read more of his insights at heraldtribune.com/business. Securities offered through Avantax Investment ServicesSM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory ServicesSM, insurance services offered through an Avantax affiliated insurance agency. 8225 Natures Way, Suite 119, Lakewood Ranch, FL 34202.