Emotional Investing in Times of Uncertainty

Investors want to enjoy a good night’s sleep each night because they’ve done their work, know what to expect, and that nothing comes as a surprise to them. However, in times of uncertainty, most of us let our emotions get the best of us, especially about our investments. Part of the luxury of a good night’s sleep is being financially educated and planning for when things don’t go as expected, as well as when they do. With the uncertainty of today, keep in mind what you can and can’t control and help avoid emotional investing:

#1- The current state of the US.

Aside from political battles, public health pandemics, and social injustices, choose to make a difference by helping others and, in turn, feel better about what is going right for our country.

#2- Money.

Saving, investing, being debt-free, and planning for all that can go wrong, as well as when things go right, is something an advisor can help you accomplish.

#3- Work.

Maybe it’s time to look for a new job, or perhaps you’re currently unemployed? Use your time at home over the next few weeks to make decisions about changing jobs or retiring as you have planned for possible.

#4- Healthcare.

Staying healthy, the access to and costs of affordable healthcare, future health problems, and how to pay for them can lead to anxiety. Financial planning includes having adequate healthcare coverage, an HSA, and an emergency fund in place.

#5- The US Economy.

The economy reflects stock market performance, which is why planning for a stock market correction is imperative. Consider investments that are not correlated to market performance or are asset-protected products such as fixed-indexed annuities.

Navigating ‘fear selling’ is what advisors train investors to overcome. Fear causes us to make mistakes, to not sleep at night, and may lead to emotional investing. Still, if we can educate ourselves to navigate away from our inappropriate reactions. Or perhaps our portfolio can be spared from bad decisions.

Helping investors to determine when to sell a fund or stock may be best, and when to wait out the market correction for the right time saves investors hundreds of dollars over the lifetime of their portfolios. Stock market corrections come on average about every 357 days, as the US economy peaks and troughs. But as we’ve seen with COVID-19, a volatile market can be devastating and unpredictable.

Adding Annuities

One way that investors avoid loss is by including annuities in their retirement portfolio. Annuities, which are becoming more widely used in the financial services industry. It is a contract with an insurance company to provide investors with a guaranteed stream of income in retirement. They offer tax-deferred growth of earnings similar to other traditional tax-deferred investments.

When it comes to your investments and money, nothing can be done to help the current state of the U.S. economy. We cannot stop a stock market correction, but together we can plan for it and avoid emotional investing.

Disclosure: Any guarantees are backed only by the claims-paying ability of the issuing insurer.

The opinions expressed here are those of the author and not necessarily those of the investment advisory firm. Please discuss these matters thoroughly with your financial advisor prior to making any investment decisions.

Withdrawals and death benefits are subject to income tax. If you are investing in an Annuity through a tax-advantaged plan such as an IRA, you will get no added tax advantage

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As a retirement income specialist and 38-year veteran of the financial services industry, August H. Velten understands what his clients need in order to enjoy a comfortable retirement. Augie is a former instructor for the Life Underwriter Training Council. He once occupied the legislative seat for the Maine Association of Life Insurers. At August H Velten & Associates, we know that it is your retirement, and you should have control over it. We offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!