Most individuals know that following the markets can be stressful. Behavioral finance looks at how reactive emotions can lead to self-sabotage. Fortunately, there are some habits you can develop that may help you make calm, clear financial decisions, regardless of what the markets are doing.
One, understand your risk tolerance. Everyone has a different relationship with risk. Wise investing strikes an approach to risk that also considers your time horizon and personal goals so you can attempt to ride our temporary wobbles more comfortably.
Two, seek out informed discussions. As many as 35% of workers turn to friends and family for financial advice.1 Even though they mean well, family and friends aren’t always the best source of financial advice. Instead, reach out for a chat with your financial professional. Helping you make sound decisions is what we’re here for.
Three, maintain portfolio diversity. A diverse portfolio is a time-honored strategy. Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.
Four, understand your strategy. Educate yourself. Start to see the market fluctuations as part of the process and remember that your strategy is built to withstand those changes. Such knowledge can go a long way towards easing stress.
And remember whatever happens, we’ll be right there with you every step of the way
1 2021 Retirement Confidence Survey, EBRI, 2021