As the kids go back to school, it is a good time to review the ABCs of successful investing.
A – Adjust Your Expectations
Expect that stock market selloffs, which are normal, will occur quite regularly – it’s just the nature of beast. But historically the losses have been temporary. Some losses have been greater than others, but the markets have historically generated significant wealth for patient investors.
During those selloffs, expect to feel anxious and maybe fearful, but that doesn’t mean you act on it. And that brings us to the Bs of investing.
B - Behave Rationally
One of the best ways to do that is to temper our emotions and desire to respond immediately. This isn’t easy, but essential to making wise financial decisions. Ignoring the financial media, complete with its forecasts and focus on short-term outcomes will make it easier to behave rationally.
Finally, consult with me. Together we can ensure decisions are mindful, free of emotions, and in line with your goals. And that brings us to the Cs of investing.
C - Cling to Your Plan
Your plan has been customized. It is your personal road map. Your plan accounts for down markets and temporary losses. It assumes bad markets and good markets. So, a down market is not an indication you are off course. It is factored into your plan.
Due to the uncertainty of markets, how quickly they can change, and how they often surprise us, clinging to your plan provides the best chance that you will reach your goals, despite the occasional setbacks.
©Behavioral Finance Network