As summer kicks into full swing, you may have noticed that the temperatures aren’t the only thing going up. Inflation continues to rise, with the increased cost of living particularly evident at the gas pump and in the grocery store. Paired with the recent market downturn, it’s fair to say that this quarter has hardly been a day at the beach for investors.
And that’s why we’re sharing these thoughts today. It is fair to say that. And it’s fair to feel it. It’s normal, in fact, to feel concerned or even a bit fearful in the face of temporary adverse realities. After all, wealth management isn’t about abstract numbers – it’s about what we will be able to do in retirement, and what we will be able to pass on to our children. Investors have a lot at stake, and it doesn’t make sense to expect them to go through their wealth management journey devoid of emotion.
What does make sense, though, is to ask them to prioritize their long-term benefit over their short-term concern.
History repeats itself – and that’s a good thing.
The past can be a decent indicator of the future – and when it comes to wealth management, that’s a good thing. There are two main lessons we can take from the long history of investing as we know it:
First, the market regularly goes through fluctuations – sometimes quite dramatic ones – but unfailingly ends up continuing along an overall upward trajectory. This means that the market may go down from time to time, but it never stays down.
Second, when investors turn understandable emotion over short-term difficulties into action, they often make decisions that harm rather than help their long-term strategy. For many, giving in to the pressures of a bear market can result in catastrophic setbacks from which their retirement plans may never recover.
What we know, what we don’t know, and what to do about it.
Based on history, we know that the market’s volatility is a given, but so is its overall upward trajectory over time.
We can say, then, with a good degree of confidence, that the market will go back up. What we don’t know is when. A rebound is on the horizon, but just how close that horizon is and how quickly the market will recover once we get there are unknowns.
So what do we do about it?
The first thing we do is honor the present moment. Investor emotion is real and deserves acknowledgment as a normal human reaction to changing and sometimes trying circumstances.
The second thing we do is safeguard the future. When short-term emotion fuels decision-making, investors are more often than not left with long-term regret. It’s my goal to help you stick through the downturns so that you’re there for the upturns – and the future you’re working so hard to secure.
Future-proofing your investment strategy.
What it comes down to is, what fuels your investment strategy? Is it the roller-coaster ride of euphoria and panic that follows each spike and plummet of the market? Or is it the solid, measured discipline of continuing to execute a purposefully-crafted plan over time?
Our job at N1 Advisors – and our privilege as your partner and advocate – is not to insulate you from short-term market volatility, but to steer you away from the regret that invariably follows a fear-driven departure from the carefully designed plan we’ve mapped out together to help you reach your long-term goals.
We’re honored to be here with you, to talk, to listen, and to remind you of what — and who — you’re staying the course for. In the end, that’s what makes all of the perseverance worthwhile.