Preventing or Planning
Fear vs. Long-Term Financial Planning
When you make financial decisions, are you more concerned with preventing temporary emotional discomfort or planning for your future? This is a question you answer through your actions every day.
Fear is the basic underlying emotion at work when you attempt to prevent emotional pain. In most cases, this fear is generated by short-term worries or even the possibility of some future troublesome event.
Addressing your primary financial fear directly can provide clarity and space for long-term planning. In our short-term focused world, long-term planning is underappreciated.
Keeping Your Long-Term Financial Goals on Track
Think about driving across town to meet someone for lunch. Do you take every side street along the way because traffic is heavy? If your objective is to arrive at your destination on time, all the detours usually won’t help. The same principle applies to your investing decisions.
There will always be surprises both in your life and the financial markets. Best selling author Morgan Housel writes in Same As Ever, ”We are good at predicting the future, except for the surprises, which tend to be all that matter.”
If you’re working toward a prioritized set of long-term financial goals, wandering off course every time something uncomfortable occurs isn’t productive. Your overriding objectives should be the primary driver for your investing strategy. As David Booth, founder of Dimensional says, oftentimes the best decision is to “stay in your seat.”
Planning for Market Volatility and Setbacks
Your financial planning should include different scenarios for achieving your most important goals. You should expect some setbacks along the way. Remember, markets usually go up and down, not just up and up.
When you believe the markets or economy are in upheaval, the hardest part can be doing nothing. Yet, reacting to every twist and turn in the market probably isn’t the answer. Waiting is an underrated financial skill.
When you consider investment choices, keep in mind that your governing principles and aspirations matter most. Don’t let the transient themes of the day send you down a financial rabbit hole.
Staying Focused on Your Long-Term Investment Strategy
By maintaining an optimistic perspective you can develop the mental toughness and discipline needed to stay focused on your long-term goals even in turbulent times. Financial markets can be very volatile in the short-term. Don’t let this be your reason for altering your plan.
Your planning efforts should also recognize that your priorities might change over time. This isn’t unusual and underscores the need for financial planning to be an ongoing , not episodic activity. If your goals materially change then your strategies and timelines will likely need to be tweaked as well.
Focus on Planning Instead of Preventing
When you try to prevent having any anxiety from investing, you’re essentially trying to solve a problem in the future today. You can’t do that. Focus forward on why you are investing and planning in the first place. That should provide the perspective and patience you need. Start there. Ready for a real conversation?
Disclosure
Apollon Wealth Management, LLC dba J.E. Wilson (Apollon) is an investment advisor registered with the SEC. This document is intended for the exclusive use of clients or prospective clients of Apollon. Any dissemination or distribution is strictly prohibited. Information provided in this document is for informational and/or educational purposes only and is not, in any way, to be considered investment advice nor a recommendation of any investment product or service. Investing involves risk, and while remaining invested can support long-term goals, it does not guarantee a profit or protect against losses. Advice may only be provided after entering into an engagement agreement and providing Apollon with all requested background and account information. Please visit our website https://apollonwealthmanagement.com for other important disclosures.