What was the last thing you did that scared you? While you probably experienced a brief flash of terror that had you wanting to run for safety (I'm swimming in a tank...WITH SHARKS), at the end of the day, the experience was likely worth the anxiety. The same goes for investing. Emotions certainly have a way of clouding our judgment—especially when our hard-earned cash is on the line. And while a market crisis can be enough to cause many to jump ship on their investment strategies, keeping your cool and staying the course can be critical to your long-term investing success.
While you certainly can't predict the market's ups and downs, Fidelity's got 5 tips for weathering them:
1. Set clear goals, then stick to your guns.
Let's get personal here. Don't just say you're going to save for the future—that's too vague. Instead, think about exactly what you're saving for. (My very first house!) The more emotionally invested you are in your goals, the less likely you are to bail on them when the market takes a turn.
2. Listen to the pros.
Enlisting the help of a financial guru can be a smart way to get some good objective guidance. Many companies publish articles, hold online seminars, and offer insights and perspectives on money-related topics. Fidelity Viewpoints®, for example, highlights Fidelity's latest thinking on market trends and news. Bottom line: Find a resource you can trust to make informed decisions about your money.
3. Put together a market crisis plan.
Dr. Frank Murtha, psychologist and co-founder of MarketPsych says, "In a crisis, the best way to prevent panic is to feel you're prepared for it." A financial professional can help you put pen to paper, and outline a plan that works for you. You may not even need it—but you'll stress less if you've got it.
4. Learn how to cope.
Stress can get in the way of making rational decisions. Coming up with some coping mechanisms can help you stay on track. Stop reading the headlines. Take your dog for a walk. Meditate. Whatever. The point is, do something to get your mind off the crisis at hand.
5. Keep your eyes on the prize.
Life is constantly changing—so it makes sense to check in on your plan as time goes on. That means looking over the market's performance and reassessing your strategies to make sure that (insert your personal savings goal here) is still on the horizon.
THE BOTTOM LINE:
While emotions certainly have their place (think rom-coms and cotton commercials), leave them out of it when it comes to investing. Much like swimming with sharks, the less you panic, the better off you'll be.
Take the next step
Give us a call with any questions about your investments.