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  • Posted December 19, 2016

Don’t Buy into the Hype

If you’re watching the markets you’ll have seen them enter record territory, and people predicting all sorts of potential endings. At the end of the day it doesn’t matter what the market is going to do in the immediate future unless you plan on withdrawing from your accounts. And if you’re planning on withdrawals, my hope is you’ve already shifted to a more conservative stance.

Here’s my view – markets are going to go up, until at some point they correct themselves and drop. Over the long term the money invested is going to grow, barring any mistakes on the part of the investor(s) – for example trying to time the market and buying high/selling low. I have yet to see proof anyone can predict the next winner with regards to asset classes, and in my opinion the best thing you can do for yourself is diversify your portfolio – considering when you will need the money and how comfortable you are with your accounts going up/down.

As a further hedge for yourself, set aside (2) years of cash for retirement. This way if the market bottoms out the year you retire, in most cases you will not need to withdraw from your accounts; providing yourself an opportunity to potentially gain some of the losses before taking distributions. This could be limited by age, if you must take required minimum distributions; but it will still lessen the damage by reducing the amount withdrawn.

Most of us have, or know someone who has; made an emotional decision they regret. That’s exactly what is happening when you sell because of fear of what the market will do after the inauguration, or Brexit, or any other headline that is bound to pop up. It’s also what happens when we buy something because it’s done so well – for example all those who were buying gold not too long ago.

If it’s not part of your plan, or the only reason you’re doing it is because of how you’re feeling in a moment, then take a step back and reconsider. Get an impartial opinion, from someone who isn’t living in the moment you are; and stay open to what they say. Of course, if this was easy I’d have nothing to write about. The first thing you can do to help yourself is create a plan, because it’s what you will come back to whenever you are in doubt. If you’re not sure where to start, or in what order you should do things, find a professional you can trust and work with her/him.