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Stay Calm & Carry On

How to keep emotions in check when investingInvestor emotions and behavior often impact investment results. Evidence of this is often prevalent during bear markets and presidential election years. Unfortunately, 2020 provided us with both, as well as the uncertainty that came with the COVID-19 pandemic. However, there are steps investors can take to help keep their emotions from getting the best of them, regardless of the year or the reason.

The first step is to be mindful of time spent consuming news and/or social media. Stay informed and connected, but try to avoid going down the rabbit holes these sources can lead to. Ask yourself what your goal is regarding news consumption. Determine if you could meet that goal with more focus and less time spent. Consider setting a daily social media time limit. Think about deleting social media apps from your phone, forcing yourself to be more intentional about accessing these sites.

Second, focus on what is likely to happen rather than the potential extreme outcomes that could occur. Successful investors focus on what is known and what is most likely given the current fact pattern and history. Building an investment strategy around extremes, like the next Great Depression or the next tech boom, is likely to result in disappointment. Instead, focus on what is most probable and the actions you can take to improve the odds of positive investment results.

The third step is to have a stress-tested financial plan in place. Investors who have a financial plan that illustrates how they can meet their financial goals, even during the tough times, are more likely to stick with their investment strategy and remain calm.

Finally, share your concerns with a trusted advisor. Staying rational can be extremely difficult when it comes to your own money. Talking with a trusted advisor about your concerns and receiving context and guidance can go a long way toward easing your fears. Sometimes, as humans, we just need to talk it out.

There will always be periods of time that are tough for investors. However, these actions lay the groundwork to enable you to stay calm and make good investment decisions during these periods instead of being overcome by emotion.

For more information, reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.

FORVIS Private Client services may include investment advisory services provided by FORVIS Wealth Advisors, LLC, an SEC-registered investment adviser, and/or accounting, tax, and related solutions provided by FORVIS, LLP. The information in this presentation should not be considered investment advice to you, nor an offer to buy or sell any securities or financial instruments. The services, or investment strategies, mentioned in this presentation may not be available to, or suitable, for you. Consult a financial advisor or tax professional before implementing any investment, tax, or other strategy mentioned herein. The information herein is believed to be accurate as of the time it is presented and it may become inaccurate or outdated with the passage of time. Past performance does not guarantee future performance. All investments may lose money.

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