Nervous about the markets?
Photo by Claudio Schwarz on Unsplash
I rarely talk about the financial markets because it’s not something you have much control over. Sure, you control how you invest and why you are invested the way you are – more on that later – but trying to predict the future with any certainty is largely a fool’s errand.
And yet…
It’s no fun watching your investments decline in value even if it is temporary in nature.
The question then becomes what, if anything, can you do about it? I suggest you start by answering the following question:
Why are you invested the way you are?
Or put another way:
Are your long-term investments specifically aligned with your future goals?
How you’re invested should incorporate goals like your desire to pay for college, take family vacations now and in retirement, and have a comfortable level of retirement income. Your long-term investments should also account for how much you’re able to save toward those specific goals.
When you know your long-term investments are taking on the least amount of risk that still gives the best chance of achieving your specific goals, you understand that short-term fluctuations are a no-fun, yet necessary part of being a long-term investor.
There’s no free lunch out there when it comes to investing. The higher the return you’re hoping to receive over the long-term, the wider the range of fluctuations – up and down – you can expect to experience in the short-term.
If you aren’t clear on why you’re invested the way you are, before you make any changes to your long-term investments, start by clarifying what uniquely matters most to you and why. Then, allow your values, specific goals, and ability to save toward those goals to serve as your guide in choosing your long-term investment approach.
And if you are clear on why you’re invested the way you are, remind yourself that feeling nervous is normal. The short-term market fluctuations you’re experiencing right now are also a normal part of being a long-term investor. Rather than constantly worrying about it, take this opportunity to revisit your overall financial framework and look to see what, if any, adjustments might be necessary.
Focusing on what you can control and taking actions on those things is how you’ll get yourself back on track so you can resume feeling comfortable and confident to continue living your best life.