We have all been adjusting to life in a global pandemic: donning a mask every time we leave our front porch, working remotely and educating our children at home, and bearing stock market volatility. 2020 has been a rollercoaster year.
Personally, I love rollercoasters (of the amusement park variety). The twists, drops, and fast turns are exhilarating. While the upside-down loops can be a bit scary, I know I’m safe. I’m not in danger.
The pandemic has brought to light new twists and turns in our daily life: some are scary and dangerous (a high-risk individual contracting COVID-19), and some are scary but not necessarily dangerous (juggling a career while homeschooling kids). Distinguishing between what is fear-inducing and what is truly dangerous is important has real consequences for your financial life.
Fear is a dangerous motivator for financial decisions. We all know a “fight or flight” response can help us get through dangerous situations. But if we are not in a dangerous situation, fight or flight reactions may be detrimental, particularly when it comes to our money. When we feel scared, we allow thoughts like “The stock market is plunging!” or “The stock market is hitting all-time highs while our economy is crumbling – something is terribly wrong!” to be our primary guide for financial choices. Fear makes us feel like we need to do something, to take action, even if we aren’t acting on sound guidance. Trying to jump in and out of the market based on gut instincts because we want to avoid market drops can prevent us from riding through the market highs, too. Most stock market wounds are not from companies bleeding money; “most stock market wounds are self-inflicted.”
I bet your biggest financial goal isn’t to leave this earth with as much of it accumulated as humanly possible. If, instead, you want to use it for the benefit of yourself and the people and causes you care about, then the best thing you can do is to plan for how you want to use it. That plan will then be the driving force behind your future actions.
Let me give you an example.
When my dad was teaching me how to drive, we would go to a parking lot near our neighborhood and I’d practice three-point turns, backing up, and parking. But if my dad asked me to drive him somewhere today, I wouldn’t go to that parking lot and drive around aimlessly, I’d ask him where he wanted to go. Once you know how to drive, it’s useless to get in the car without a destination. Likewise, it’s pointless to invest your hard-earned money without a plan for how it is to be utilized.
If thinking about investing makes you feel anxious and uncertain, instead of empowered and prepared, then you need to talk to a professional financial advisor who is a fiduciary. At Pathfinder Wealth Consulting, discovering your financial goals, both in the short- and long-term, and crafting a custom investment strategy to help you accomplish those goals, is our area of expertise. All of our wealth advisors have obtained the CERTIFIED FINANICAL PLANNER™ certification and we have helped people ride the rollercoasters of the of the last three decades including the dot-com bubble, 9/11, the Great Recession, Brexit, Chinese trade tensions, middle east conflicts, natural and nuclear disasters, changing politics, and the coronavirus pandemic. And we expect to face more rollercoasters in the future – but we know how to help people ride through them without danger.
Almost all major life decisions, including financial ones, can be scary, but they don’t have to be dangerous. We are here to guide you forward.