How to deal with financial stress by doing nothing
Over the years, I have repeatedly pointed out that investors need an iron stomach in order to climb the wall of worry. It appears that 2020 has established itself as the poster child for that notion. COVID-19 didn’t just take tens of thousands of lives, it changed the way we live and work.
Many found themselves suddenly unemployed, while others live in fear of being next on the chopping block. Sudden job losses have definitely pushed money concerns to the forefront.
If you’re fortunate enough to maintain a good paying job, you may be living a familiar scenario. You’re working from home in a business meeting with colleagues who are also at home. Your kids are getting an on-line education in another room. And if that isn’t challenging enough, your mom is calling you from a senior community that you’re not allowed to enter.
When you finally get out of the house and into your car, you turn on the radio to learn once again that our elected officials can’t agree on a COVID-19 relief package. So they continue to bicker like children.
Meanwhile there are riots across the country and fires are burning out of control and destroying homes on the west coast. And close to home we’re experiencing perhaps the most stressful circumstance of all. The chances of the Detroit Lions getting to the Super Bowl are over before the Big Ten football season even begins.
Yes, there’s plenty to worry about. These are unquestionably stressful and challenging times. Factor in the upcoming election and all the drama following the passing of the beloved Ruth Bader Ginsburg and it’s easy to understand why the investment world is bouncing around like a rubber ball.
So you have to wonder: With all of the turmoil and uncertainty going on, should you consider abandoning your investment strategies? After all, investors do need to periodically review and, if necessary, tweak their investments. But my answer is no. Abandoning is not the same as adjusting.
Money in the bank? You may feel a rush when your account value holds steady. But with all due respect to the banking industry, bank deposits earn minimal interest with no potential for growth.
Nobody can predict the future, but time and time again history proves that people with iron stomachs who ride out financial storms have a pretty good track record.
Yes, some have suggested that it’s different this time because of the pandemic. Nobody knows for sure. But what we do know is that you, the consumers, are resilient and businesses are innovative.
Goods and services are being delivered to households each and every day. Companies have had to adapt to the new environment and reinvent themselves in order to survive.
Supermarkets are a good example. Many went from in-store shopping only, to calling in orders for pick up, and then to home delivery. Consumers adapted their shopping habits in accordance with these innovations. Creative ideas have helped some to survive and others to thrive and even become profitable.
Nobody ever said it was easy to be an investor. I’ve never met anyone who likes to see their account values decrease. Stress and anxiety are real emotions, but I believe it’s best to keep those emotions from taking control of the purse strings.
