Well it looks like uncertainty and worry have returned to the investment markets and people are wondering what to do. Most investors are trying to figure out whether this is the top or if the market has more room to run. They want to know whether they should be buying or selling? But they are distracted and focusing on the wrong activities.
Long-term investors should not be paying attention to the short-term fluctuations of the markets. They should be concentrating on the fundamentals: create a savings plan with goals, save for retirement at work, create automatic savings outside of work, and know and track your net worth. Unfortunately, the majority of Americans are not paying attention to the fundamentals. According to a survey managed by the Consumer Federation of America (americasavesweek.org) less than 40% of folks surveyed had created any of these necessary fundamentals.
Why on earth would you be concerned about the price of Bitcoin or the net worth of your favorite celebrity when you haven’t prepared for your own family’s financial security? Stop looking at the stock market’s gyrations and begin to create a savings plan. Create a budget to live within your means, pay down your high-interest debt, create an emergency savings account, enroll for automatic payroll deductions into your company’s retirement plan in an amount that’s at least enough to earn your company’s full matching funds, buy life and health insurance, and get a simple will and financial power-of-attorney.
Review your investment account balances quarterly and maintain a balance between stocks and non-stocks (usually bonds and cash.) If you need help determining the amount to be split between these investments use our risk measurement tool at www.michaelbradyco.com/ADAM-risk-number. You should re-balance your accounts when this split is out of whack by more than 5%.
If this all seems daunting take it in small steps but keep moving forward. You might also consider finding some professional help. Seek out a fee-only (no sales commissions), fiduciary (must put your interests ahead of their own and will put this in writing), Certified Financial Planner professional (experience, education and ethics.) You can search for fee-only fiduciary planners at www.napfa.org or call our office for a complimentary review of your situation.
Stop paying attention to the talking heads on television and start taking care of your family by focusing on the fundamentals. Let us know if we can help.