Everything will change after the elections…how many times have we heard that over the past few months? While some take comfort in the fact that there will likely be some changes (hopefully for the positive) after the election, others are panicking. This is especially true for investors who were already worried that the pandemic would kill their retirement. The added uncertainty of what will happen after the election is enough to make many investors panic. Here’s how to avoid freaking out and making emotional decisions that could hurt you financially.
Elections, riots, COVID…oh my! In this world of chaos, it’s easy to feel out of control and anxious. However, I like to remind my clients that there is always an apocalypse du jour. It’s just how the world works. We made it through the collapse of the housing market, we made it through Brexit, and we’ll make it through this. Keeping calm, of course, is easier said than done. Those who are able to keep things in perspective are more likely to be emotionally agile and able to adjust their behaviors and expectations based on what’s going on in the world. Do we have to like what’s going on in our country right now? Of course not. But we have to accept it and understand that it’s not the end of the world (or our portfolio).
Avoid the News
One of the best ways to keep calm is to stop watching the news. Sure, you want to be informed about what’s going on in the world, but do you really need to check the market every hour or watch every single political debate? The news and media have one agenda: to incite fear and boost ratings. When you regularly tune into the news, you’ll be convinced that we’re experiencing the worst times in history and that Armageddon is just around the corner. Turn off the news, open a good book, and relax. This, too, shall pass.
Imagine Five Years into the Future
One of my favorite strategies for dealing with uncertain times is to fast forward and ask myself if this will still be an issue in five or ten years. Yes, COVID is changing how we live right now and yes, the election will likely bring about some upheaval. But will it really matter all that much in ten or fifteen years? There will quite likely be a new apocalypse du jour by that time and the election and virus will be a thing of the past.
Stay the Course
When you respond to events in the world or changes in the stock market by making changes to your portfolio, you are an emotional investor. Emotional investors rarely get ahead because they are reactionary. Instead of being proactive and working with a good financial counselor who can help them set a good strategy they can stick to, they make rash decisions based on what they think is going to happen. Emotional investors are usually highly stressed, addicted to the news, and are hit hard mentally and financially by each apocalypse du jour. Those who are calm investors rely on strategy and advice from their financial partners who usually tell them to stay the course and trust their plan.
If you’re suffering from pre-election panic, you’re not alone. Remember that this is just one more in a long string of chaotic events and that it will soon pass. Need more advice or want to talk about your financial strategy? Reach out so we can continue the conversation.