The Financial Crisis…in my Head or Did the Alarm Go Off and I Didn’t Hear it?

Oil plummets, stocks plummet. Are we where we were in 2000 and 2008 or is Chicken Little at it again, screaming to anyone who will listen that the sky is falling? Are we there, with another financial meltdown which will take a 2-3 years to recover? I don’t know. I do see the effects of the media shouts. I do note how I react.

Unlike March of 2000, when I took all investments off the table right before the crash, I am still in the market. Unlike Sept of 2008 when analysts and pundits were continuing to assure the public that everything was fine, and I decided to listen to them instead of myself, and only took some money off the table, I listen much more to what I need from my own money.

The inaction I took in 2008 taught me a valuable lesson. Regardless of what analysts think or say that may turn out to be right or wrong, first listen to yourself. In this case, about money and the markets, it was and is today: what do I want from investing? Am I trying to turn $100,000 into $1,000,000 in 10 years? Am I trying to preserve what I have? Am I trying to do both? What do I want from investing? Am I trying to make some “educated bets” knowing only a few, if any, will actually succeed? Why am I investing? This question is not asking for the quick, knee jerk response like “I am investing for retirement.” Because that statement does not have enough substance to it. What retirement? When? On how much? Doing what? For how long? Am I willing to question my advisor’s strategy during tough financial times; questions like: What is your strategy during tough financial times? How do you define tough times? What have you done in the past during tough time? How will we build a strategy for me? How will you monitor it?

Sometimes you can’t know what you need until you know what you want.

Once you know why you are investing, you can begin to forge a system of how to invest. Let’s say you have $50,000 which you want to grow to $100,000 in 10 years. When you talk to your investment advisor, build a strategy to take you there. As there are no guarantees in the financial markets, be sure to include accountable measures and milestones so you can readjust your portfolio, take “winnings” off the table, and help guide your portfolio to its mark rather than rely the passive ups and downs of the market. Have a strategy to take money off the table in the event a downturn occurs so you feel safe and your money is protected.

Don’t wait for the firefighter to let you know your house is burning. Install an alarm in the house that is set to go off when certain events happen to warn you to do something.

Leave me a note about how you deal with your own financial head talk, especially in financially tough times.

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