This is the highest level of intensity we've seen in over a decade. From North Korea to Russia, to Iran the market is forced to respond. But, what does that mean for your personal finances and staying on track to reach your investment goals?
We break down the number one key to financially succeeding during this volatile season in this episode of More Than Money.
When volatility looks to be on the horizon, we see people shovel money from "risky" assets like stock into safer things like gold, bonds, treasuries etc. And no surprise... it's happening again.
So, should you look to move your investments to "safe money"?
You'll hate my answer but, "Yes and No."
Here's why it's both, and it depends on your situation:
Before I can advise you on what to do you have to know how much risk you are taking.
Understanding your risk is the first step.
If you can't say at how you are invested you need to look right now. Before even finishing this blog. This is essential to your success.
Maybe you understand your risk and you're still wanting to move to safer money. We understand the temptation but read this first.
This is exactly what we call market timing. And, honestly, it doesn't work.
Market timing will make you feel good immediately, and leave you full of regret in the long term.
Back in November, we were sitting on the second longest bull market in history and all the market indicators predicted a stock market tank if Donald Trump were to become the next president.
But, out of all the client calls I received on the election day, I had one client who didn't reach out to me in haste. He told me I could share his story of him reacting on his own accord.
One of my clients decided to go against my advising and change his 401K allocation. Here's what happened...
He was embarrassed to admit it to me because we had the discussion before.
He adjusted everything to be super conservative and he sold a lot of his stock to go into safe money and missed a HUGE chunk of growth forcing him to buy back in at a higher level.
Honestly, how often has everybody predicted the market and it hasn't been true?
Market timing is a dangerous game the will land you in the middle of trouble.
The reason you should look at your allocations is not because we believe in market timing, but it is because we have to live in a place that matches your risk tolerance.
Financial success isn't about hitting big on a feeling. It's about being in a great position to succeed no matter what happens in the market.
Market timing loses consistently. Strong planning will win every time.
If you have not looked at your portfolio you need to make changes. NOW.
The key to being financially successful is knowing your risk tolerance and making every decision based on the amount of risk you can handle.