Business Q&A: How can I achieve a solid financial plan without raising my stress level?
Q: I was recently diagnosed with an anxiety disorder. My physician suggested that I try to find ways to relieve stress. I manage my finances and read as much as I can and watch the news, but I get anxious when there are so many differing forecasts. My goal is to have a financial plan that doesn’t rely on my children. Any advice?
A: You are in good company since anxiety disorders are common and money is often a significant source of stress, usually surpassed only by health issues.
Bad news dominates the media and their revenue is earned by selling advertising and subscriptions. One cable news channel has a host who gives financial advice and used to oversee the Jerry Springer show. Entertaining perhaps, but not necessarily a competent forecaster of economic cycles and financial markets.
Change is often in the top ten of most people’s “worry list,” and our world is changing more rapidly than ever. Think of the pace of artificial intelligence (AI) technology and the controversy surrounding it.
Top of the financial worry list is running out of money in retirement. The controllable factor is investing in the appropriate mix of stocks, bonds, real estate and other assets based on risk tolerance and time horizon. The uncontrollable factor is the state of the world.
Since you recently sought medical advice when you became ill, consider working with a personal financial advisor who will create a comprehensive financial plan for you. Choose someone you trust who does more than just investments; find an experienced, independent, confidential, and qualified pro who will guide you through all financial issues.
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Often people worry about losing money with their investments; there will be price volatility but that doesn’t mean there is a loss. A loss or gain must be realized, and the investment must be sold to lock in the gain or loss. The objective is NOT to sell when markets decline.
It’s valid to be concerned about making poor financial decisions. Understand the investment or product. Does it sound too good to be true? Stay mainstream with investing by using publicly traded, liquid, diversified funds that are regulated. Private placements are usually not liquid. Insurance products often lack transparency and are burdened with high fees. Hedge funds are often leveraged resulting in higher risk.
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Due to recent events, Federal Reserve officials are creating a new team of cryptocurrency experts to review unregulated stablecoins. It’s safer to hold investments that are regulated, transparent, liquid and cheap. Expensive investments often result in lower returns.
Many of us worry about global uncertainty and economic downturns. There will always be reasons not to invest. Fun fact: if you had invested $10,000 in a low-cost total stock market fund the day that Pearl Harbor was bombed, ten years later the balance would have been about $37,000. The same $10,000 investment on 9/11 would have resulted in about $59,000 after 20 years. Time horizon matters.
We closed out the first quarter with large-cap stocks (Wilshire U.S. 2500 Large Cap index) up 7.4% and the tech stock index (Nasdaq) up 16.8%. There is much excitement surrounding money market funds paying north of 4% for the first time in over a decade, but we also know that inflation erodes purchasing power. Our money buys less. A mix of different asset classes provides a return that can hedge against inflation.
Our worries may be relieved with unbiased guidance. We feel better when we have a clear path that will achieve our long-term financial goals. We hope your financial plan will relieve your stress and improve your health.
Mary Baldwin, CFP®, is a fee-only financial planner at Buckingham Strategic Wealth in Indian Harbour Beach. Contact her at 321-428-4555 or mbaldwin@buckinghamgroup.com.
For informational and educational purposes only. Individuals should speak with a qualified financial professional based on their own circumstances to determine if the above is appropriate. The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth.
This article originally appeared on Florida Today: Managing finances in a hectic world without stress: Is that possible?
