I'm not one for riding roller coasters much these days, but I do have some good advice for the rest of you thrill-seekers. While roller coasters might seem dangerous, they're actually quite safe. In fact, pretty much the only way you can get hurt is if you jump off.
Watching these past few months in the markets, I'm reminded of this lesson often. The roller coaster of the market can be scary, especially when it takes big dips and does drastic loops, but usually the only way you'll get seriously hurt is by doing something like jumping off the ride.
The Destination or the Cracks?
Think about it this way: When you're on the path to a goal, whether that's a financial outcome or a personal achievement, do you keep your eyes on where you're headed? Or do you keep your eyes focused on all the cracks and bumps in the pathway? While it's certainly good to be aware of potential problems and pitfalls along your journey, if you remain overly focused upon every minor negative, you'll never actually reach your goal!
The same is true of investing. If you let fear control your investing strategy, it's unlikely you'll achieve the same outcomes as you could if you stayed calm during market volatility.
And though it's unfortunate, I understand why many people have a hard time not seeing doom and gloom every time the market takes a dip. After all, we live in a world inundated by television and internet media that perpetually focus on sensationalizing market drops and forecasting gloom on the horizon. We so often see media personalities going on and on about certain negative statistics without actually getting the context behind them. In reality, many of these negative statistics are insignificant in the grand scheme of things, especially when we have a well-diversified portfolio looking toward a long-term goal.
But when the rest of the world is telling you all about the cracks on the sidewalk, it can be hard to keep your focus on where the sidewalk leads—especially if you're trying to make the journey alone.
Who Will Prevent You From Jumping Off the Ride?
One of the largest services any wealth manager or financial advisor can provide is serving as your accountability partner when there are large drops in the market. Right when you're about to jump off the ledge and make a rash decision, a good advisor is there to give you perspective and peace of mind—and pull you back from the edge.
Because the truth is drops, dips and recessions are all but guaranteed in the future. The volatility we've all seen occur over the past year is almost assuredly going to occur in a similar way in the future. It can be incredibly difficult to remain steadfast and unemotional during these times, especially when the media would have you believe the sky is falling. A good financial advisor can help you keep that cool head and looking toward the future.
Through this most recent rough patch, I've helped many of my clients reaffirm their goals and stick to their guns, and many of them are now seeing their perseverance start to pay off.
Patience Pays You Back
I can tell you from experience that those who view drops in the market as opportunities to build wealth (and don't run at the first sight of trouble) often find they reap great rewards later down the line. Turn off the TV, work with a trusted advisor, and keep your eyes on the long-term goal, and you'll be well-prepared to enjoy those same benefits of level-headedness.
John Lindsey is President and CEO of Lindsey & Lindsey Wealth Management. After years of experience in executive leadership and finance, John founded Lindsey & Lindsey Wealth Management in 2012 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.