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This Week at a Glance

• Have you ever been on the verge of a breakthrough but stepped back because of a setback? It’s that way with investing too. When the markets shake, it’s easier to think about quitting or searching for a magic pill rather than sticking it out. That’s why this week, I discuss why sticking to your plan, not panicking, is essential for long-term success.
• The S&P 500 and the Nasdaq retreated 0.3% and 0.2%, respectively from their record highs on Wednesday following the release of the latest FOMC minutes. Nevertheless, Thursday’s futures are poised for a sharp rebound following a better-than-expected earnings release from tech company NVIDIA.
• Using your wealth to buy back your time is one of the best things you can do for your well-being. But if you don’t approach hiring help in a mindful way, it could cost you. That’s why last week I covered three things I do to avoid hiring a bad fit for help around the house.

There’s No Such Thing as an Investing Magic Pill

Hi. I’m Peter. I’m a functional introvert, but I generally enjoy public speaking.

But it wasn’t always this way.

You see, when I was a college freshman, I did what any reasonable person would do to get over their fear of speaking, and I signed up for a public speaking course.

What better way to get over your fear of speaking than to get up in front of 30 perfect strangers and say something, right?

Well, early on in this one particular class, I was paired up with a partner whom we’ll call Ryan.

And, as part of our first public speaking assignment, Ryan and I were tasked with learning as much about one another as possible in fifteen short minutes.

From there, it was our job to introduce each other to the rest of the class.

So how’d I do?

Well, I took careful notes, and when it was our turn to present, I walked up to the front of the class and nailed my introduction.

I felt great!

Then, it was Ryan’s turn.

But, Ryan’s presentation didn’t go as smoothly as I had anticipated.

That’s because Ryan was more nervous than I was, and the coping mechanism for his nervousness turned out to be humor.

Now, have you ever met someone who, when they get nervous, they just start cracking jokes?

Well, unfortunately for me, to ease his tension, Ryan decided to use his budding sense of humor to make the class laugh, but at my expense.

In fact, Ryan was so nervous that he didn’t even bother reading from his notecards.

The truth is that he just created a giant fictitious story about me simply to keep his schtick going.

And so, just a few days after that unfortunate event, I dropped the course and gave up on my public speaking pursuit for some time.

Now, it took me a while to get back up onto the public speaking horse after that situation.

But, had I been able to move past that one uncomfortable event…

Had I been able to look back at that one awkward circumstance and had just taken it for the learning experience that it was, I wouldn’t have wasted so much time not improving my communication skills.

Now, have you ever been right on the cusp of achieving a goal, but walked away at the last minute because of a momentary setback?

You know, Thomas Edison was known to have said that, “Many of life’s failures are people who did not realize how close they were to success when they gave up.”

There isn’t a magic pill out there that will get you from where you are today, to where you want to be in the future.

Indeed, reaching for shortcuts, whether that’s looking for the promise of a safe haven financial product or the promise of a risk-free investment home run, rarely leads to the outcome that we’re hoping for.

How to Stick to the Plan, Not the Panic

That’s why, when it comes to how you or I manage our wealth, it’s crucial to stay committed to a disciplined long-term strategy, no matter what’s going on in the markets.

So then, it’s essential to develop a disciplined investment strategy, understand why you’re investing in the first place, and then stick to the plan, not the panic.

Because if you don’t, you not only risk financial loss, you may also end up introducing unnecessary stress and anxiety in your life, which could ultimately set you up for financial and personal setbacks.

Here are some of the steps I take when I’m tempted to deviate from my long-term plan:

Step #1: Review Your Investment Objective

An investment objective defines what you aim to achieve with your investments, like preserving your money, generating income, or growing your wealth.

By understanding your objective, you can make investment decisions based on your long-term life goals and not just short-term market trends.

Ask yourself: “Do I clearly understand my current investment objective, and does it truly reflect my financial goals and personal values?”

Take a second look at your investment policy statement (IPS). This document reflects your risk tolerance and timelines, asset allocation and investment constraints.

Step #2: Check for Investment Misalignment

Investment misalignment occurs when there’s a discrepancy between your portfolio’s current holdings and your IPS-defined asset allocation.

This could be due to changes in market conditions, life circumstances, or shifts in your long-term goals.

Ask yourself: “Is my current investment strategy and asset allocation still in line with my IPS?”

This step is key because misalignment can derail you from your financial destination, leading to inefficient asset growth or unnecessary risk exposure.

Conduct a thorough review of your portfolio. When necessary, rebalance your holdings so that you can reduce overallocated holdings, and add to underallocated positions.

Step #3: Stay the Course

It’s tempting to want to go looking for a magic pill when your portfolio isn’t performing the way you want it to.

But, staying the course is vital for achieving long-term financial success. It prevents knee-jerk reactions to market volatility, which can compromise the growth and security of your investments.

Ask yourself: “If I am considering a change to my investment strategy, is it because of market noise, or is it based on a well-thought-out plan?”

Staying the course means adhering to your investment strategy even when market conditions are uncertain. Unless your IPS needs to be adjusted to reflect life changes, stick to the plan, not the panic.

What I’m Reading

We’re all busy in the daily rush of things. That’s why I’m sharing a list of articles that I’ve read this week to help you stay on top of your own financial independence journey.

I’ve consolidated all of these links here for your ease of viewing.

• Are Annuities A Good Investments
• Market Timing: What It Is and How It Can Backfire
• Investment Strategies for the Long Term
• Ten Things to Consider Before You Make Investing Decisions
• Here are the Reasons these Investments are Bogus

Thanks for taking a look!