
It can be difficult to be a responsible investor in a world filled with short-term thinking and impulsiveness. Things move so quickly and there are so many distractions that it’s easy to get caught up in the chaos of it all. Additionally, many of the headlines we see on a daily basis are negative, overblown, or both.
How can we keep a level head while bad news swirls around us? How can we remain steady, smart investors when news outlets and social media influencers are crying “doom and gloom” and making dire predictions?
Thinking Long-Term
One of the most basic pieces of advice I give to investors is to think long-term. Don’t get distracted by the media, the latest buzz on social media, or even current events. While it’s true that the events of the day can negatively impact the market, it is also true that the market has never failed to recover.
Even if the downturn lasts for months or years (the ‘70s oil crisis, the mid-2000s Great Recession, the COVID drop, etc.), the economy (and market) eventually finds its footing, recovers, and continues to make gains. Those who were level-headed and didn’t stray from their long-term investment plans were rewarded for their steadfastness. And those who fled the market? They were forced to buy back in at a loss.
Building a Solid Portfolio
If you take the time to create a diversified, robust portfolio with a competent financial advisor, you should be able to weather any storm. Such a portfolio can bring you through periods of rapid inflation, economic uncertainty, turbulent current events, or bear markets. When you don’t put all your eggs in one investment basket, you will be better equipped to withstand all types of crises. And aside from rebalancing your portfolio from time to time, you shouldn’t need to fiddle with your investments.
Outperforming Inflation
One of the elements of a solid portfolio (as discussed above) is choosing to invest in securities that are likely to outperform inflation. Historically, stocks (and equities in general) have easily outpaced inflation. High-yield bonds are also typically a smart investment for keeping up with or surpassing inflation. As always, talk with your financial advisor about the right mix of securities for your situation.
Tuning Out the Noise
Another standard (but important!) piece of advice I give to help investors keep calm and make smart decisions is tuning out the “noise.” Doomscrolling or falling for sensationalist headlines will only feed your underlying anxiety and potentially prompt you to make unwise decisions. I suggest taking in the news in limited quantities and stopping yourself from becoming immersed in social media. With everyone fighting for clicks and views, the more outrageous headlines will win.
Don’t let yourself fall prey to these tactics. Instead, I suggest imposing time limits on scrolling (you can download any number of apps to help with this), putting your device in airplane mode, and focusing on being present. It’s amazing how healthy it is to unplug and live in the “real world.” (For more tips on limiting negative headlines and “noise,” read my past blog post.) The world is unpredictable and chaotic, but it’s crucial to not let short-term headlines and “doom and gloom” influencers guide your investment decisions. Instead, make a conscious effort to keep a level head, think long-term, and limit the media you consume on a daily basis. As always, I suggest talking to a trusted financial advisor to 1) help you set up a long-term, solid portfolio and 2) advise you on any changes you’re thinking about making. They will usually be a steady voice of reason.
