“Change is the only constant.” You’ve probably heard this expression before. I believe it is sometimes attributed to the Greek philosopher Heraclitus, but it gets used often as a business mantra or by people who are seemingly always in motion. It’s also a reminder that despite our best efforts at times, change happens. I’ll admit, change can be scary, but it can also be a wonderful thing. It can force us to reflect on where we are and where we want to go. It can also provide us with an opportunity to try new things and make decisions that we have been putting off. For example, changes in the markets can force you to re-evaluate your investments and portfolio (did you really think I wasn’t going to tie this back to investing or retirement planning some way? lol.). That can be a really good thing. Markets are prone to change as companies come and go and stocks trend up and down. As such, you will need to buy and sell investments from time to time, especially if you are investing for the long-term. Same goes for your retirement planning. Over time, your benchmarks and goals will change and you will need to act accordingly. Yes, it can be a bit scary to think about having to pivot your retirement saving plan, but it can also be exciting. It can be refreshing to have a new interest or goal that fits with what you want more than what you currently have. It really all depends on how you look at it. Change can be a wonderful thing, are you ready for it when it eventually comes?
With tomorrow being Thanksgiving, now is a good time to reflect on what you are thankful for in your life. Is it your family? Your health? Your career? A combination of all those things? Furthermore, with the year quickly winding down, now is a good time to being thinking about the past year and how things have changes, as well as to start thinking about what your goals are for 2020. This shouldn’t be a sudden process, but a gradual one in which you take your time and really think about things. So, for the time being, enjoy your time with friends and family tomorrow and savor the turkey and all the yummy sides that go along with it. Happy Thanksgiving!
It’s the last day of 2018, which means it’s the perfect time to reflect on how the past 365 days went financially. What were your financial goals at the beginning of the year? Did they change over the 12 month period? Did you meet most, if not all, of your goals for the year? What are your goals for 2019? These are all questions that you should be asking yourself as 2018 comes to an end and 2019 begins. You should also take some time to set your financial goals for the next year. When you do so, you should set break them down into groups. Have a set of short-term goals and a set of long-term goals. Short-term goals should be goals that can be accomplished in 365 days. A good example might be saving a certain amount of your earnings or putting a certain amount on money into your retirement account. Longer-term goals are those that cannot be accomplished over one year, but rather are part of a multi-year process. A good example might be saving a certain amount of retirement savings by a certain age. You can then prioritize and focus your energies as you see fit once you have divided your goals. Remember, while it’s important to focus on your goals, failing to successfully complete a goal is not a bad thing and shouldn’t weigh upon you. Instead use it as a learning experience to see what you did right and what you may need to work on when it comes to your finances.
If you have used the markets to grow your nest egg and finances, how did you react to gains and losses? What did you do and how did you feel after market fluctuations? As with anything you interact with, your past actions and experiences with markets and investing can shape how you handle markets ups and downs in the future. This is important to understand because it can lead you to avoid making mistakes in the future as well as to understand the role that emotions play in investing. Emotions can cloud out rational thoughts, which in turn can lead to irrational–or reactive–decision-making, which is not something you want to do with your investments. Instead, you want your decisions to be well-thought out and sound–you want them based on trends and research and not just your gut. Taking the time to understand how you reacted to market movements, particularly downturns, can also help you to develop formulas and put in place protections for the future. For example, if you know that you overreact negatively to market downturns, you may want to put a process in place for how you will make decisions should a downturn occur in the future. You may want to write out what your limits for loss are and what you will do when you hit those limits or benchmarks. This will allow you to turn to that guide to help you make decisions in certain situations instead of just making up things on the fly. It can be tough to look at the past and re-hash what may have been some bad decisions, but doing so also provides an incredible learning opportunity and a chance prevent such mistakes from happening in the future.