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Rough Landings and Long Term: Managing Your Wealth Management Expectations

February 08, 2016
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The stock market's landing into 2016 has certainly been a rough one. With the drop in oil prices, concerns over China's economic future, and quite a bit of fear plaguing the media, the market has had a fairly dismal January.

What's a bit more concerning is this pace is somewhat likely to continue for a variety of reasons. Akin Oyedele, a marketing columnist for Business Insider, explains, 

"Uncertainty about how markets respond to the first interest rate hike in nine years, commodity price weakness, and slow global growth are some of the things strategists have identified as potential headwinds for stocks and earnings."

For most, the slow pace of growth and gains is scary. It's certainly never inspiring to see our investments drop in a significant way. 

However, if you are wise – and because you're reading this, I imagine you are – you didn't build your investment strategy with a "get rich fast"mindset. So I'm here to remind you to do one very important thing:

Relax. 

Fear is, and always will be, a terrible investment strategy. Many investors often act against their best interests when making investment decisions based upon fear. Slow growth or big drops in the market cause many investors to panic and stray from a well-crafted plan, only harming their strategy in the long run. Here's my best advice to those concerned with current market growth:

1. Don't Stress the Day-to-Day

For most of us, the market isn't a daily cash cow. That's not our intention with our clients. For our own part, we're concerned with building long-term wealth that ensures our clients' hard work will keep their families comfortable for decades to come. Therefore, a few down periods does not mean an investor will be broke, bankrupt and living on the street by the next payday. One of the best ways to remind ourselves of this fact is to simply not get tied up in the daily moves of the market. To quote Warren Buffet

"Games are won by players who focus on the playing field, not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays."

If you're working with an advisor you trust, I can assure you he or she is doing the necessary work to keep your portfolio on the right track. Allow your advisor to handle the day-to-day responsibilities of managing your portfolio, and you'll find yourself free from the stress a down day on the market can cause.

2. Start Saving Now 

This point can't be stressed enough. The more you save now – regardless of age – the more prepared you'll be for your future. Building the habit of reigning in your spending and saving money regularly will keep you feeling much more secure when market growth is not ideal, and is much more likely to help your returns in the future.

As Albert Einstein once said, 

"Compound interest is the most powerful force in the universe."

Keep saving and preserving your money, and you can put that powerful force to work for you.

3. Keep Your Eye on Time 

Simply put, one of the most important factors in building long-term wealth is how long your money has been in the market. As a variety of studies have shown, the probability of losses is much higher in short-term holdings. However, that probability goes down significantly the longer the money is in the market. It's much less about timing the market than it is about time in the market.

While there's certainly no telling what the future holds, these statistics are very telling about the value of patience and perseverance. Giving yourself a long runway for your investment strategies to pay off (and not expecting your wealth to balloon overnight) is one of the best things you can do, both psychologically and financially.

Help an Advisor Help You

All in all, I think the most important thing investors can do is to work with an advisor they can trust. Having a trusted advisor helps you know your hard-earned wealth is safe in their hands and allows you to focus on the important things you face each day, without the stress of worrying about your financial plans. 

As always, I'm here as a resource for any of you who have questions or concerns. Please don't hesitate to reach out!

John Lindsey is President and CEO at Lindsey & Lindsey Wealth Management. After years of experience in executive leadership and finance, John founded Lindsey & Lindsey Wealth Management in 2012 to be able to better serve his client base with an expanded universe of investment offerings. His biggest piece of advice is to always stay true to yourself and never compromise when that compromise would endanger your principles.