A guide to stress-free investing & why I never worry about the stock market
And how you can stay calm amidst the market chaos (today and tomorrow)
Time to read: 8:30
I have been a financial planner for almost twenty years, and only one time in my career has a client ever made what I call “the big mistake.” And, having personally worked with several hundred people over that period of time, I’m pretty proud of that track record.
What’s the big mistake? In this context, it’s when they allow their emotions to take control and they sell their investments during a stock market downturn.
Now, it’s time for a little story…
In early 2009, in the depths of the Great Recession, a client of mine called me every single day for about a month. Like clockwork, when the market opened (that’s 9:30 am ET), he would call me and tell me he wanted to sell everything in his investment accounts.
For weeks this went on. Every. Single. Day.
Honestly, it felt like groundhogs day. He’d call, we’d talk, he’d do nothing. Until the day he showed up at my office.
And I get it. Those were very scary days for all of us. Now, imagine being a financial planner and having to worry not just about your own money but the money for hundreds of people and, in some cases, their entire families (parents, kids, grandkids).
When you have been entrusted to be a steward for hundreds of families and their money (and now 20,000+ at my current company)...that’s a very real, and very big, burden to carry. It’s also one of the greatest honors of my life that people place that kind of trust in me And I don’t take it lightly.
One of the overlooked roles that good financial planners play is to be the person that stands between a client (I now call them members at Facet) and the big financial mistake. There’s more value in this than most people will ever know or give credit to.
And this situation would test my ability to do just that.
Here’s how the conversation played out (paraphrasing just a bit):
He said, “That’s it Brent…I’m out. Sell everything. I’ll get back in when things are better.”
I looked at him and replied, “You know how I feel about that decision. And, today, if that is your choice, I will honor it.”
He looked at me, and I could see the fear in his eyes, and said, “Yes. I can’t sleep at night. I need to do this.”
We ended up selling the investments in his non-retirement accounts (i.e. he agreed to stay invested in his 401k and IRAs because he couldn’t touch them for another 10+ years anyways).
Our professional relationship ended shortly thereafter (for a series of reasons), but I remember hearing that he took his money and bought silver and gold bars and had them stored in his basement. That’s a true story.
We have several mutual friends so I’ve heard, over the years, that he never did “get back in.” The truth is that there will always be something to worry about IF you are looking for it.
Never trivialize the emotions we feel
I share this story because I know there are people out there that feel this way when we hear bad news about the economy and/or when markets start to go in the opposite direction than the one we prefer (i.e. down).
This is very real for a lot of people. And, also, when we act on these emotions is when we make big financial mistakes.
The goal isn’t to not have emotions. The goal is to:
#1 - Understand that emotions are very real and very normal. We aren’t wrong or bad for having them; we’re human.
#2 - Be able to process the emotion, understand the source (the cause), and to find a way to get back to a state of “financial calm” (where we can balance logic with our emotions).
If we try to fight our emotions, we often just add fuel to the fire.
I’ve learned how to acknowledge, process, and work through my emotions in my 20 years as a planner. I’ve also learned how to quiet those emotions.
Here’s how.
I have a clear vision for the life that I want
A few years back, I went through an exercise of defining my ideal day. I’ll share that exercise in a future post.
It took some time to get it “right” but it has paid immense dividends.
The outcome of the exercise was to get my head out of thinking about money and to think about the life I want to live.
If I were to ask you, “what does living a fulfilling and enriching life look like” what would your answer be?
I know what my answer is, and, as a result, I am able to focus my time, energy, and money on making it a reality.
In short, I know the WHY behind my money.
And, honestly, if you can get here, you’ve done a good amount of the heavy lifting.
I know what I want to achieve, why I want to achieve it, and I know how to make my money work for me and the life I want.
If you don’t have a clear vision of what this looks like, don’t worry. It’s not an easy exercise, and I had a great friend and mentor of mine help me in the process. It takes time and it can feel a little scary and daunting at first. But when you get there, it can truly be life changing.
And then you can make decisions that are aligned with that life and the person you want to become. As a result, I have the clarity I need to follow my path and not to be distracted or worried about someone else’s.
I have a clear plan to make it possible (in time)
When I work with people, I generally ask three question:
What do you want?
Who do you need to become to make it possible?
How will you get it?
The step above (creating a clear vision for the life you want) will help you answer questions #1 and #2. This section is about #3, the HOW.
Since I have a clear vision for what I want to achieve, I am then able to create a clear strategy for all facets of my financial life.
And if I am being completely honest, I used to strive for perfection in my plan. Everything had to be completely right before I would make a decision.
What I’ve learned in my career is that simple, actionable strategies that lead to action are exponentially more valuable than waiting to find the perfect path forward.
My motto is → imperfect, incremental, implementable.
So here is what I have in place:
A process to manage my cash flow (how much I make, the taxes I pay, how much I spend and how much I save and invest).
An appropriate emergency fund based on my monthly expenses, the fact that I’m a dad with a little baby girl, the fact that I own a home, etc. etc.
I have a strategy for my banking relationships and a high yield savings account for my emergency fund.
I paid off my student loans just last year so all I have now is a mortgage.
I even have what I call an “opportunity fund.” It’s extra cash on the sideline to help me sleep at night and so I can take advantage of opportunities if/when they pop up.
I have the proper insurance to protect my family.
I have an estate plan to protect my health and my family as well.
I have an investment strategy for different “buckets” - one is for money I might use in the next 5 to 10 years and one is for the money I likely won’t need for 10+ years.
I know how much I am adding to my accounts. I know the types of accounts I am using and how they are taxed. I know the fees I am paying in pretty much every investment. And I know the level of risk I am comfortable taking based upon when I will use the money.
AND I have a “fun money” account where I let myself invest in crazy things like crypto. It’s a very small account but it’s my outlet for releasing FOMO and YOLO vibes.
The bottom line is that I know my WHY, I know my HOW, and I put it into action every month.
I check my cash flow monthly (because I’m a planner at heart) and I revisit my plan every 3 to 6 months or when a material life event occurs.
My plan isn’t static because my life isn’t static.
That doesn’t mean I am making changes every time I look at it, but I know it’s healthy to review my strategies and to make course corrections when needed.
Step 1 was getting clarity around what I want. Step 2 was creating confidence knowing I am doing the right things with my money for the life I want.
I’m an expert and have a team behind me
I have an advantage that most people don’t; I’m a CFP® Professional and a smattering of other designations (Chartered Financial Consultant®, Accredited Behavioral Finance Expert™, Certified Blockchain and Digital Asset™ advisor, Master Certified Life Coach™, and even a Crossfit Level-1 Trainer).
I have the expertise to understand my money and my emotions, to create a financial plan that works for me, and even the expertise to think about the life I want.
And even with all of this, I still have:
A financial planner who is a CFP® Professional as well.
A professional and life coach.
A fitness coach.
An accountant (who is a CPA).
And an estate planning attorney.
Plus I have an investment team at my company (Facet) that manages my accounts based upon my life and my plan.
I have the dream team I need to bring my plan to life.
I cannot express how valuable every person on that team is to me and my overall plan, and I encourage everyone I meet to build the version of a dream team that is right for their situation.
I don’t have all the answers, but I know I have the right people around me that can help me find them and to put the right ones into action.
And that is something that I can’t quantify in terms of a cost or price, but I can tell you that it’s priceless.
Never having to worry can be your reality
I am not immune to stress or worry or a bit of FOMO from time to time. As someone battling an anxiety disorder, these things are all part of my daily life. But I have put in place a process and systems that I know work for me.
My WHY gives me clarity.
My HOW gives me confidence.
My PLAN helps me feel in control.
My TEAM helps me take action from a state of “financial calm” and not one of emotion and chaos.
Together, this makes all the difference. I don’t worry about the economy, the markets, interest rates, corporate earnings, what Apple/Google/Tesla/Nvidia are doing, or anything else.
I have an ever-evolving plan that allows me to focus on what I can control.
And I can never guarantee an outcome, but I am confident that the combination of clear goals, simple strategies, consistent action and time will lead to the results I want to achieve.
Imperfect, incremental, and implementable. And that works for me.
I hope this article helps you start your journey towards the path that will work for you.
Cheers to health, wealth, and the good (financial) life,
Brent