It is easy to see the financial headlines screaming out about one crisis or another during particularly turbulent times in the market. As human beings, we tend to react to such headlines in the exact opposite way of how we should react. It is in our nature to avoid pain (losses) and seek pleasure (gains). The problem is that when responding to this we often sell as the market is falling and buy as it is rising.
Proper financial planning would dictate that we attempt to override these hardwired emotions and take control of our investing life in a smarter way. The first step is to turn off the financial news and not allow the latest buzz to impact your decisions.
Check in with financial news media sources such as CNBC or Bloomberg and you are bound to find someone making a “bold” prediction about the market. There are quotation marks around bold because so often the pundits are not really saying much of anything. They want to possess the aura of being an expert while at the same time not taking a leap of faith on a prediction.
When the pundits and news makers do say something of substance they are very often wrong. How can this be the case though considering their supposed expertise? A lot of it has to do with making financial news exciting.
How Do You Make Earnings Reports And Spreadsheets Sexy?
Most of the business world is not all that exciting to the casual observer, and yet there are television programs about it. In order to get as many eyeballs on those programs as possible, the financial media has to spice things up. They must act as though every wiggle in the market could somehow be indicative of something happening in the broader economy.
Anyone who has worked in financial planning for any period of time will tell clients that minor market moves are not relevant to a long-term strategy at all. In fact, anything less than a 5 year or perhaps even 10 year movement in the market is meaningless to long-term investors. Their horizon is far enough away that there is no need to keep up to date on the very latest moves.
Who Can You Trust?
If the financial media isn’t giving you the right information for investing properly, who can you trust? The short and simple answer is someone who really is an expert and doesn’t have a vested interest in trying to entertain you. In other words, a qualified financial adviser is a good option.
Moneycrashers.com, a financial advise website, does recommend looking for qualified financial advisers if you are ready to invest. Erik Folgate, a writer for Money Crashers explained it like this,
I think that someone from any pay grade can benefit from the advice of a quality financial advisor. The key here word here is a QUALITY advisor. Make sure you do your research on finding a financial advisor that has the heart of a teacher, not someone who is only there to push a sale down your throat.
These advisers will often do more listening than talking. They will not pretend to have all of the answers, and they are honest about the challenges in the market. What they want to hear about more are your goals and expectations. Based on that information they provide useful advise about investing and how to plan to reach those goals. They do not offer “hot tips” or “whisper stocks”, but rather solid investment advise that works.
Contact us for more information about financial planning and how to do it right.
Eric Folgate: http://www.moneycrashers.com/author/erikfolgate/