2018 has become an unbelievably stressful year for investors. From tariffs and trade wars to politics and corporate fraud, 2018 will be remembered as quite the year of drama. It seems like you cannot go a day without seeing something concerning in the market, making you want to just give up. With volatile periods, I figured it would be helpful to look back at some themes from this year and hopefully help ease the concerns around the market.
We have seen volatility before: In March of this year, I wrote a post explaining what you should be focusing your time on. No investor can control the market, corporate profits, or anything relative to economics. As investors, we need to focus on HOW we are invested (our asset allocation), our job and career development, and our health. Nobody can control the output of the market so instead, we have to position ourselves for whatever comes our way. Good or bad, the market will do something, we just don’t know exactly what. So instead, focus on making a difference in the things that matter. Read more here.
Be patient: Warren Buffet is recognized as one of the best investors, not due to his investing genius alone, but more importantly his temperament and patience. Investing involves risk but more importantly TIME. Sure, certain years are going to fall flat of our expectations, not every year can be a winner. Growing wealth in the market takes years, maybe decades, for best results. This isn’t news to anyone but we need to make sure we are not too quick to make any bad/emotional decisions. Read more here.
Avoid Emotional Decisions: When our investments are down or maybe event flat, we feel the necessity to do SOMETHING. But the answer is not always to act. Sometimes, letting our investments alone, we see the best results from our portfolio. There are literally hundreds of articles explaining how investors always buy at the wrong time and sell at the absolute worst time. “Life is 10% what happens to you and 90% how you react to it” so make sure you are acting appropriately to any news! Read more here.
Ask for Help: If your job is not an economist, financial advisor, or investment professional, ITS OK to not understand what is going on in the markets. There is no rule that says you need to understand the complexities of trade wars, tariffs, or inverted yield curves. This is the EXACT TIME you want to connect with your advisor and make sure your investment match your goals. I’m going to repeat that…
CONNECT WITH YOUR ADVISOR TO MAKE SURE YOUR INVESTMENTS MATCH YOUR GOALS
Your investments DO NOT need to always react to tariffs, interest rates, or other political concerns. Instead, your investments should be changed as your life changes to make sure you are saving for the right reason. Getting married, having kids, changing jobs, or retiring. These are the areas you should be focusing on since they are controllable.
At the end of the day, the market is going to do whatever the market decides to do. We are not able to plan it but instead along for the ride. The best investors are always the ones with a diligent mindset to hold on. You don’t need to be picking the best investments each and every year but instead of focusing on an appropriate allocation for your stage of life. If your unsure of your investments, that’s what we are here for!