A plethora of negative financial news continues to dominate headlines. In moments like these it's important to remember some key fundamentals. I go over 5 of them, rules if you will, that are good reminders both now and always!
It doesn't really matter...
Negative news, potential recessions, actual recessions, uncertainty, et cetera, et cetera... will always exist.
Predicting the negative isn't the key.
Learning how to live with it is.
Here are 5 Rules that will aim to help you live with all the uncertainty out there!
Why you should invest like an optimist
The growth of $1 dollar in the S&P 500 Index from 1947 to 2022 would now be worth roughly $5,000 dollars
See visual of Stock Market History at 2:09 in video (it's breathtaking)
Why you should save like a pessimist
You can control your saving, you can't control what the stock market does.
Mortgage with a reasonable interest rate = not excessive
Mortgage on a 2nd home = might be excessive
Home equity loan to remodel basement to begin renting to then pay off quickly = I can get behind that
Home equity loan to take family on a cruise = this is a no no
Car loan on affordable car with low rate = yes please
Car loan on expensive car because that is the only way you can afford it = no thanks
Excessive debt makes you vulnerable.
Market timing = Making any adjustment to your investment portfolio of any kind BECAUSE of negative news.
Making adjustments to an investment portfolio is just fine for many different reasons, negative news should not be one of those reasons.
See video at 5:06 mark to se the impact of missing some of the best days in the stock market...
How is it possible that you can buy into and sell out of some of the most successful companies in the history of the world within days?
Publicly Traded Exchanges
To be able to sell in and out of publicly traded stocks daily, you need to know the price daily.
The price moves around a lot... daily... for many different reasons.
But what if you don't need to cash in on your stock ownership for 2 years, or 5 years, maybe 10 years, how about 25 years? Should you care what the price is today?
Probably not.
A financial plan takes numbers and turns them into a visual of how much control you have over your future.
You might need more control. You might already have enough.
Simply knowing where you are at and what you need to do (within your control) to get there... brings calm during the storm.
Stock Market Losses 1928 - 2021
5% or worse in 95% of the calendar years
10% or worse in 63% of the years
20% or worse in 26% of the years
30% or worse in 10% of the years
Short term volatility is part of the game when investing in public markets. Don't let this impede you from missing out on all the growth that occurs the rest of the time.
Sources & Disclosures found in the video link on Youtube