The financial news is bad and getting worse every day.
How do you stay calm and hang on to your investments? How do you resist the urge to panic?
"I don't pay any attention to how I'm doing. I only open my investment statements once a year," says Dan Richards, president of Strategic Imperatives Corp., who helps train financial advisers.
He files his statements and opens them in December, when he meets with his own financial adviser. That's when they review his investments and tweak them for the coming year.
This would be a strategy that best applies to long-term investors holding diversified mutual or exchange-traded funds, as opposed to individual stocks.
Ask him how much his portfolio has dropped this year and he can honestly say he doesn't know.
"My solution is that I just don't think about it. I haven't looked at my account online or on paper since the beginning of January."
How do you stay calm and hang on to your investments? How do you resist the urge to panic?
"I don't pay any attention to how I'm doing. I only open my investment statements once a year," says Dan Richards, president of Strategic Imperatives Corp., who helps train financial advisers.
He files his statements and opens them in December, when he meets with his own financial adviser. That's when they review his investments and tweak them for the coming year.
This would be a strategy that best applies to long-term investors holding diversified mutual or exchange-traded funds, as opposed to individual stocks.
Ask him how much his portfolio has dropped this year and he can honestly say he doesn't know.
"My solution is that I just don't think about it. I haven't looked at my account online or on paper since the beginning of January."
A woman named Heather has this to say:
"My husband and I have a significant (to us) amount of money invested in mutual funds. The failure of the Wall Street bailout to pass the House caused the Dow to drop 777 points yesterday - the largest one-day point drop in history.I track our investment portfolio in Microsoft Money, and when I signed on yesterday, I nearly had a stroke! We lost $1500. In ONE day. Add that to the consistent quarterly losses that we've endured over the course of the last year, and you have the formula for severe depression.I'm not a person who is comfortable with financial risk, and a loss like this is very upsetting to me. I know that we're not the only people in this situation, and while I'm not a financial expert by any means, I do hope that I can offer some words of comfort to those of you who may be struggling with fear and anxiety during these trying economic times. Here are just a few thoughts:1) Don't panic! Remember that retirement investing is long term investing, and people who wait out dips in the market are typically much better off in the long run than those who panic and sell. Timing the market usually doesn't work - don't make long term mistakes based on short term events.2) Remember that there have been markets like this before. In the 11 years that I've been investing, I can remember 2 - 1998 and 2002- and each time it felt like the world was coming to an end. However, each time turned out to be much shorter lived than we thought it would be. In 2002 we had a definite recession, and some stocks that lost two thirds of their value regained it all within 12 months. While past performance does not guarantee future results, this is still encouraging to know!3) Now is the time for thrift. If you haven't started saving toward an emergency fund, start now! Even if you can only save $10 a week, it's better than nothing! Your ultimate goal should be to save 3-6 months of gross income. My husband and I currently have 6 months of gross income in a savings account that yields about 3% interest. I can't tell you what a comfort that cushion is to us! We know that if my husband gets hurt or sick, or his workload drops drastically, we have something to fall back on. During scary economic times when everything seems out of control, frugality can help you regain control of your money, which will help you feel safer and less anxious. "
1 comment:
The perscription: Worry about what you can change, the worry should move you to do something about it. Do not worry about what you can not change, because there is nothing you can do.
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