How to Survive Investment Statement Shock



January was not a good month for the stock market.  Investment statements should be arriving in the mail any day now and they probably won’t look good.  If you are traditionally invested in the market, you might want a few pointers before you approach the Mailbox.  The biggest mistake that investors make is making emotionally charged decisions.  When you filter decision making through emotions, your probability of making a good decision is very low.

RESOURCE – See My Video on How to Invest in a Declining Market

Make sure you have a Plan B

When the market is going up, plan A of staying fully invested makes sense.  However, when the market is difficult, you want to go to Plan B. (link to plan B article on PMFS site)  Ask your advisor what he or she is going to do.  What is their Plan B?  If they don’t have one, maybe you need to be talking to someone else…which leads me to the next one……

Investing for the long-term is not a Plan B

Pop Culture Finance wants you to believe that the way to survive a bear market is just stay invested.  After all, you are a long-term investor.

Always look at the market from a risk/reward standpoint.  If the risk level is lower (which it will be at much lower price levels) then the reward is high.  If the risk is high (as it is right now) the probably of growth is much lower.  Since the financial services industry doesn’t believe in a Plan B approach (because they don’t want their advisors managing money) they give the hand holding speech of stay invested and everything will be ok.  As an investor, I wouldn’t except that as a Plan B.

RESOURCE-  See my Video on How to Invest your 401 K Plan

Have a Financial Plan powered by Goals and Values

Without a financial plan that is powered by goals and values, it is real difficult to interpret a loss on a statement.  The problem is not that your account values are going down.  The problem is that you don’t know how this is effecting your overall financial goals.  With a well-planned out roadmap, you know that at the end of each year you have to be at a certain level of investments.  For example, let’s say that by the end of the year you have to be at 400,000 to be on track.  Let’s say after the loss you are already at $403,000.  With that information you can make clear headed decisions.

Don’t Ignore it

The “throw the statement in the drawer strategy” is not a very good strategy.  Pop Culture Finance will actually tell you just don’t look at your statements.  It is super important to be on top of the risk you are taking and what is happening with your account.  It is good stewardship.

Pop Culture Finance will attempt to help you with the emotional pull of loss through clichés and the appearances of absolute truths.  The stakes are too high.  Know your risk level, have your plan, and work your strategy.

If you want a second opinion, take me up on a 20-minute phone consultation.  It doesn’t cost you anything.  All you have to do is send an email here


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