Re-running this edition due to popular demand… Younger and less experienced investors (new college grads, younger workers buying a first home or saving in a 401k for the first time) can especially benefit by learning these steps, but really anyone can be better off:
If anything has been important since mid-February 2020 it has been being mentally strong and resilient – or having friends and family who are mentally strong to lean on. Believe it or not, this has nearly always been the case with investing.
DISCLAIMER: THIS IS EASIER SAID THAN DONE!
A recent article in The Wall Street Journal alluded to the concepts of mental strength, resilience – and process – amidst the coronavirus.
The topic of the article was Gratitude. Please stay with me here! Apparently, over the past several decades research has established gratitude as a powerful way to boost the immune system. Without getting too deep in the medical terminology, the physiological immune system “is like a cellphone battery…and it is important to recharge it.”
- Gratitude has proven to be an established way to recharge the immune system. Even more important, gratitude involves process. Here is where the comparison to portfolios and investing comes in.
- The “Gratitude Process” involves:
- Acknowledging the facts of what we can control,
- Challenging negative thoughts and not letting negative thoughts completely take over,
- Reframing these thoughts to something more positive and helpful,
- Breathing (!!)
- Paying attention to the present moment,
- Stating specifically what we are glad we have in the present.
The research also says that keeping a written journal of things in our life for which we are grateful each day is a good start AND that “people who practice being grateful report …higher levels of well-being”*.
The process can be equated to portfolios and personal finance:
- Acknowledge facts we can control = Have a PLAN & an Asset Allocation
- Stick to a well-laid out plan even when the market challenges short-term performance (as it has),
- Have an Adviser who asks tough questions and checks in to reinforce the positive and well-thought out factors in the portfolio amidst volatile and down markets,
- Breathing is still recommended,
- Reaffirm often with your adviser the overall plan and progress toward your goals,
- Pay attention to the present moment while knowing it is necessary that you and your adviser also consider the long-term,
- Recognize that investing is a long-term process and TRUST in your adviser is paramount – and something for which to be grateful.
At the same time, I am grateful for the trust my clients and friends place in me to provide financial advice and guidance. These concepts cannot be forgotten in the midst of a global pandemic and market turmoil.
A reliable portfolio process can be VERY mentally rewarding in the present – and lead to accomplishment of personal financial goals in the short-, intermediate- and long-term. I always remind younger, newer investors that a minimum time frame for even a small amount of satisfaction is at least 2-3 years. After that point it is almost as if a light switch turns on and lights up the magic of saving.
Please stay in touch during these times and always.
*Please ask me to share the WSJ article.