Life Is What You Live, Not How Well The Market Is Doing

Posted by: Joseph Kuo | May 6, 2022

We can’t control what the market does, and stressing out about it won’t help our situation.

There’s been a lot of stress and anxiety regarding the stock market in recent weeks. Over the past several weeks, the market has given back all of its gains from the last 12 months. Not surprisingly, some of my clients have become concerned and have asked me if they should be doing something.

Remembering Why We Invest

As we all know, the ultimate goal of investing is to build a “money making machine” that can achieve critical mass over time and create wealth for you so that you can stop working one day and maintain your current (or better) standard of living.

It’s natural to worry about the status of our investments because our goal is to quickly build a great “money making machine” by maximizing our returns. We can try to make that happen sooner by choose individual stocks that hopefully become wildly successful. But hitting on one or more stocks and making enough to retire tomorrow rarely happens for most people.

Risk will always be an inherent part of investment. But we can mitigate that risk by being prudent with our investments. We can choose an investment strategy and set aside money regularly to contribute to our investment accounts.

For most people, investment success comes from having the discipline to set aside money regularly and investing enough of that money into the stock market directly through individual stocks, or indirectly through mutual funds. By investing in the stock market, we preserve our purchasing power against inflation and take advantage of the power of compounding and reinvesting our dividends. It’s not a quick way to get rich, but the math is undeniable over time. Even professional investors use more or less the same approach.

Some of my clients did hold large positions in stocks which dropped. But because they had diversified portfolios, their loss has not been as bad as it could have been. Instead, they are coming to realize that it’s actually an opportunity to buy some stocks at value prices.

Don’t Live Through the Stock Market

But we can’t live our lives around what the stock market does. When we check our investment balances daily, seeing the results swing back and forth can cause unnecessary stress and affect us emotionally. When the market goes up, there’s always the chance people will sell bringing the market down, and when the market is down, it’s an opportunity to buy and bring the market back up.

If you’re working with an advisor and/or have an active investment strategy, it’s not really productive to worry about the day to day balance, or worry when the market is at a low. There’s nothing we can do to affect the market, and so worrying about the market is not productive.

For most of us who are not retired or close to retirement, even if the market completely cratered tomorrow, or conversely, if it were to double tomorrow, our daily lives would still remain pretty much the same. (If we are retired or close to retirement, the funds we need should be already  allocated among less risky investments.) Until we retire, there will be occasional swings, but the market will tend to revert to match the general performance of the economy and world events. As long as you continue to set aside money for investment, take advantage of dollar cost averaging, and maintain a diversified portfolio, you will do just fine.

Focus on What You Can Control

The quality of your life should be defined by what you choose to do, not the swings of the market. We can’t control what the market does, and stressing out about it won’t help our situation.

Instead, we can focus on what we can control, which is to improve ourselves and continue to look for opportunities. Even in a downturn, there are opportunities out there. Mindset and ability and constantly improving those is what will improve our lives and give us amazing futures.

When we improve ourselves, we place ourselves in a position to recognize and take advantage of opportunities. We can invest in ourselves by honing our professional skills, networking, and otherwise leveling up ourselves socially, intellectually, and spiritually.

Investing is important, but for most people, worrying about investments won’t help as much as creating the life that you want, honing your skills, finding opportunities, in value. In the end, we can only control our own internal confidence of how we can figure out what to do when the stock chips are down. Investing in ourselves will give us that ability and confidence that we can figure things out and take steps to get what we want instead of just trying not to lose what we have.

Focus on the passion of your life. Focus the energy on improving yourself and your income.

If you want to talk more about how the stock market is affecting your portfolio, contact me via email at joseph@abundancewp.com, or schedule a meeting by clicking the button below:

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