Are you an experienced investor? What does that even mean? Does experience mean that you have been through many ups and downs of the markets and you have learned a few things from all your years of investing?
Well, from my real-life experience working with hundreds of investors over my career, even the most experienced investors are likely to feel FEAR, ANXIETY, PANIC during market volatility and recessions. But it is critical to make financial decisions without EMOTION.
So, on today’s show we are going to explore the top 7 worst financial decisions you can make during volatile times.
(1:00) Practical Planning Segment: Sometimes (not always) new investors perform better than experienced investors during recessions and market volatility.
And I believe the reason is that new investors often come to me with a blank slate.
Meaning they “they don’t know what they don’t know”. They have no preconceived ideas floating around in their head and are less susceptible to panic and all the fear-based information they get from the news.
They are just getting started and fully understand that with risk comes return. As a matter of fact, without any risk there would be very little or almost no returns!
Strange Irony! When it comes to money often our life experiences do not help very much. Money and finances are extremely personal.
Part of the problem is the older we get generally the more money we obtain! Our accounts grow over time. We save more and we see these accounts start to build up over time. And this is not always the case but many times from my experience working with all sorts of investors… I have seen the money becomes a burden rather than a blessing.
I distinctly remember the story of an advisor friend of mine and his wealthiest client at the time. She was a single lady in her mid-70’s whose husband had passed away. Her Net worth in various accounts was well over 5 million at the time. Everything was paid for and she spent very little money on basic living expenses.
She had enough to live; certainly, for the rest of her lifetime and possibly for generations to come.
But something strange happened……the larger her account became, the less POM she had.
She started worrying about everything, the markets, the economy, politics, anything, and everything on the news.
She worried her kids were going to steal her money, her lawyers were going to steal her money.
Her biggest fear was that she was going to be a bag lady living on the street!
So, the money became a burden! AND I THINK how this relates to todays topic is those emotions contribute to POOR FINANCIAL DECISION MAKING.
THE TOP 7 WORST FINANCIAL DECISIONS YOU CAN MAKE IN A RECESSION OR DURING VOLATILE TIMES:
(5:20) Stop contributing to retirement plans.
(7:30) Move investments to cash or fixed income.
(10:00) Focus on short-term returns.
(12:00) Borrow to invest in the stock market.
(13:20) Focus on aggressive debt repayment
(15:40) Not seeking assistance
(17:27) Coachable Segment: The 7th and final mistake is that folks make panicked choices instead of proceeding slowly.
DISCLAIMER: Please do not take advice from me on this show. As a licensed Fiduciary I am only allowed to give advice to clients. So, unless you are a client, I can’t give you advice because I don’t know you. So, think of this as helpful hints and education only. And please before implementing any information or ideas you hear on this show always consult your legal adviser, your tax adviser, and your financial adviser…………. right? that’s just common sense.
Final Disclaimer:
“We appreciate you joining us today for this episode of The Fiscal Blueprint.
Fiduciary Disclaimer
Remember it’s not about the money but about your life!
Having a mindset and living a life of abundance rather than scarcity will change the direction of your life forever!! Enjoy the Journey!!!
“Opinions voiced in this recording are for general information only and not intended to offer specific advice or recommendations to any individual. All performance references are historical and no guarantee of future results. All indices are unmanaged and not available for direct investment.”
