Fear is Not an Investment Strategy

I’ve seen some financial planners who are feeling pretty down right now. Their clients are calling, complaining about the market, wanting to pull their investments. Some even want to stop their life insurance (what???) or change to a less expensive policy. It’s always surprising (to them) when they learn that due to health problems they can’t even qualify for a new policy.

I learned my new chiropractor used to be a financial planner. Some financial planners I know might not make it and will be looking for work.

When times are leaner, it’s time to insure against losses – it’s not a place to cut costs. Cutting costs is not an investment strategy. Neither is fear. We can cut back and cut back but we must also save and invest so we have something left for tomorrow.

The economy isn’t doing well – and that’s not news. Yesterday I read this: “The U.S. economy shrank at a 3.8 percent rate at the end of last year, in its biggest contraction since the deep recession of 1982, the Commerce Department reported Friday.”

The headlines are about job losses, and address fear:

The Shortsightedness of Fear – Tips to Stay Calm

The Secret Upside to Fear

To me, fear is like a cold, if you’re immune system is already weak, you can catch it. So strengthen yourself, surround yourself with people who have perspective, and keep moving forward. To me, fear is best counter-acted with planning. Financial planning is one of those things I need a team for. On my own I get intimidated and freeze up. Or I simply ignore my finances (not a good strategy either).

You don’t need to lose weight when you’re skinny. You don’t need health insurance when you’re young and healthy. When things are worst it’s a wake up call to action. In this case, to invest your money and build a future.

What are you doing to be calm and plan for the future when panic and fear are everywhere?

Written by admin on January 31st, 2009 with no comments.
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