The movement and emotion of investing

One of the realities of investing that we know all too well is that the markets and the value of our investment portfolios never stay the same. It seems pretty obvious to many, but somehow, regardless of how experienced an investor we are, there is still an element of surprise when we review our portfolios after hearing a news headline that tells us that the markets are down and, times, a lot. .

Yet the very nature of that uncertainty means that no one — not Wall Street pundits, not TV news pundits, not even the people on your Twitter feed — knows what will happen next.

As an investment manager and financial planner, this surprise can sometimes happen on my side of the desk as well. I spend hours in front of monitors flashing headlines, forecasters forecasting, and attending video calls with fund managers and research analysts to stay on top of current events that may affect my clients’ portfolios. I have been investing money for clients for over 25 years, and yet checking my own portfolio can still surprise me a bit when I see the impact negative news is having on real dollars and cents. Up close and personal, I understand how uncertain times can affect the emotional well-being of investors.

I am fortunate to have spent years in the midst of market uncertainty and am conditioned to remember that bear markets do not last forever. My investment experience definitely helps mitigate the impact of the emotional roller coasters inherent in long-term investing. But investing in knowledge is not the only thing that helps us weather the volatility of our investment portfolios. Have a well-diversified investment portfolio (don’t put all your eggs in one basket) and avoid emotional money mistakes (have a trusted financial advisor) are especially important in times of economic uncertainty.

What investors really need to stay on track

What else do you need to weather the emotional tides of investing? You need a plan. Not just a well-diversified investment plan, but also a comprehensive financial plan that periodically tests, assesses and projects your financial security under a broad mix of current and potential market scenarios. You should know that if your fears come true and the markets stay down for a while, will you be okay? Will you be able to maintain a lifestyle similar to the one you have been living before the markets started falling or falling further? Or, to take this to the extreme, will you have any money left over when the market dust settles? This last question really tests the strength of our perceived financial security.

So how does having a financial plan answer these tough questions? The financial planning process forces you to examine what you’re spending now, what you want to spend later, and how long the money you’ve saved will last under various market conditions. The planning process also asks you to set spending priorities based on how you think you’ll want or need to spend your money in the foreseeable future. Once your “have to haves” versus “want to haves” become clear, you’ll find it much easier to cut your spending when the time comes. In effect, he is testing the strength of your emotional and financial well-being. prior to The market downturn occurs, giving you time to make thoughtful adjustments to your short- and long-term spending goals and savings habits. This, in turn, will foster a greater sense of control when faced with many external factors that are truly out of your control.

What are you waiting for?

Now, what if you don’t have a financial plan and are worried about your long-term financial security? What if you’ve always believed that you have plenty of money to go about your days and suddenly you’re worried that you don’t? It’s too late? Do not! However, the sooner you begin the financial planning process, the faster you gain control over your finances and emotional distress. And even if your planning test results confirm you have reason to worry, take comfort in the fact that you now have the information you need to make thoughtful changes to both your spending and saving and to bolster your resources for the long haul. term. You can expect to run into some short-term financial troubles as you temporarily adjust your spending habits, but over time you’ll see the difference even small changes can make to your emotional and financial well-being in the months and years to come. So be brave and get this financial planning job done ASAP!

Financial markets will always be in motion and you will need to monitor how you react to them. If you think that investing in these markets will allow you to grow your savings, you will have to accept it. And you’ll find accepting this much easier if you’ve taken the time to do what you can to control what you can: spend AND save.

When you’ve faced your fears and come to understand the realities of your financial circumstances, you can remind yourself that you will, in fact, be fine in the long run. Find a financial advisor you can trust to take the time to get to know you and understand your concerns. Make sure you have a well-diversified portfolio to help you weather the ups and downs of volatile financial markets. And absolutely have a well-thought-out financial plan to lean on throughout your investment journey that supports your emotional well-being.

Hightower Advisors, LLC is an SEC Registered Investment Advisor. Securities are offered through Hightower Securities, LLC, a member of FINA/SIPC.

Wealth Advisor, TC Wealth Partners

Nancy Bell is a Certified Financial Planner™, Certified Divorce Financial Analyst®, Chartered SRI Counselor™ with over 25 years of comprehensive personal financial and estate planning experience. She is a wealth advisor and voting member of the investment committee for TC Wealth Partners, located in Downers Grove, Illinois.

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