5 Tips to Prepare for Market Turbulence
| Paul Fain
Many investors are switching their concerns from the coronavirus to the stock market. If the resurgent virus forces a new economic shutdown, and if everyone is forced to stay-at-home again, will the stock market take another 30% hit?
Of course, the bottom line is: “No one knows!” But to my thinking, a better question is: “What can I do now to increase my financial stability during market turbulence?”
As I initially pondered this question, for some random reason, my thoughts turned to Napoleon Hill’s popular book, “Think and Grow Rich.” Hill wrote the book right after The Great Depression, but his ideas still make sense today.
“Think and Grow Rich” asserts that a philosophy of achievement has 13 timeless principles including, organized planning, persistence, focusing on long-term goals, faith, managing negative thoughts, imagination, being a decision-maker (taking action), and more. In summary, Hill believed that your mind is the one thing that can either stop you or propel you forward.
With these principles in mind (pun intended), what can we do to prepare for inevitable economic and market turbulence?
The following are five transcendent money management principles that will help you navigate the unknown:
1. Spend less than you earn. Budgeting is mostly under our control and can be responsive to the year-to-year movement of the markets.
2. Avoid the use of debt. Debt, especially the consumer type, can rob you of financial independence.
3. Maintaining cash liquidity is essential, and having the proper level set aside is foundational to any financial plan.
4. Set long-term goals. Take only the market risk necessary to achieve these goals.
5. Give generously. Charitable thinking breaks the grip of money’s power over us and helps those in need, especially during a crisis.
Hill also mentions the importance of writing your goals down, repeating them every day, and promising that you will be persistent. It may seem a little hokey, but try it! Let’s replace “mind over matter” with “mind over money.”
This article was originally published in the Knoxville News Sentinel on July 23rd, 2020.
QUESTIONS?
Do you have questions about financial planning, investing, or retirement planning? Send your questions to our Knoxville certified financial planners or directly to Paul@assetplanningcorp.com!
