Are you watching the news right now? Are you following the US presidential election? It is hard not to. It seems like it is being talked about all the time on all media. As a financial advisor, I am getting a lot of questions about the election and its impact on investments and the markets. This is understandable since a tweet can send the markets tumbling or soaring. But when it comes right down to it, the election’s influence on the markets is essentially meaningless – unless your investment timeframe is November 1 to 5. Everyday the markets go up or the markets go down. The election will not and does not change that. All the speculation and debate in the media does not matter. It is noise. Ignore it.
One of the principles of the philosophy of Stoicism is that we cannot control external events. We can only control our reactions to events. In financial planning, in preparing for your retirement, we cannot control the markets or how the government will tax us. What we can do is understand and create our investment objectives, including what to invest in, for how long, and how much to invest. We can also outline how we should react to market performance, including downturns. This is our financial plan.
Our plan allows us to ignore the noise and evaluate the current conditions objectively because we have a bigger, longer term perspective. Stoicism also teaches that things are not inherently good or bad. It is our internal judgement that classifies things good or bad. “For there is nothing good or bad, but thinking makes it so.” as Hamlet said. The media usually portrays a market downturn as a bad thing, but if you planned for and expected one, it can be a good event because it can allow you to increase your wealth over time.
As a species, we have a need to feel like we are in control. This can lead us to make decisions that may not be in our own best interests. We react because we want to take action and feel we must do something. But sometimes doing nothing is the right thing to do. Doing nothing is also an action. Planning ahead and remembering our plan is the ultimate form of action and control. Self control.
“It is harder to manage yourself than it is to manage your money.” The Rules of Wealth – Richard Templar
Here are some tips:
- Remember your reasons for investing
- Are any changes furthering or hindering your objectives?
- What is your timeline?
- Don’t make decisions based on the news cycle – it will change, give it a minute
- Choose investments that are not dependent on governments
- Get professional advice to help with your objectives and keep you on track
Try not to get too caught up in the here and now. Remember why you are investing and try to look at the bigger picture. An advisor can help coach you and provide a larger perspective, helping to keep you on track. Don’t be afraid seek out assistance. I am here to help.
All the best.
Chris