I wish I had a dollar for every time I was told to “hold still” when I was a kid. I also wish I had a dollar for every time I’ve been asked if I was Dr. Rinderknecht’s son! I’d be retired if I got paid for either scenario! But you know, growing up is HARD! We had a lot to deal with…riding our bikes, climbing trees, playing basketball all day, playing tackle football in a friend’s front yard, and, of course, going to the pool. Atari 2600 was just coming to a house near you and there were no smart phones to occupy our time and thoughts.
But back to the words I heard over and over so many times… “Reed, HOLD STILL!”
I can’t help but smile when I think about running downstairs from my attic bedroom on a Saturday morning about 6 AM to crawl into my parent’s bed for a few minutes of cuddle time before turning on the cartoons and watching a little “Superfriends” or “Speed-Racer.” Being the parent of two amazing kids, I now understand how exhausted my own parents must have been from a long week of working and maintaining a busy household of three kids. I’m certain they were praying all of us would sleep in past 7 AM on Saturday morning. I loved getting that extra precious hour of sleep, but it didn’t happen very often!
For most investors, “holding still” is equally as difficult as it was for a six-year-old that jumped into his parent’s bed on a cold Saturday morning. Investors tend to want to wiggle…a lot! In my 21 years of being in the financial planning and investment management business, this is one of the biggest mistakes I’ve seen people make. Usually, investors want to “wiggle” the most when things get a little uncertain and crazy. The market has a way to discipline most of these wigglers that also isn’t very fun to endure. Jumping in or out or up and down usually only proves that no one can predict the future and we worried a lot about normal volatility. Markets go up roughly 70% of the time and down about 30% of the time*… (Hint: that’s good, if you can resist wiggling too much!) The best way for all of us to have a higher probability of long-term success is to do these five things:
- Make sure you understand what your money needs to do for you to achieve your goals
- Have a written Investment Policy Statement and consistently execute that strategy
- Have a plan on what/how you’ll respond when (not if) things get crazy
- Review your financial planning and investment policy regularly with your financial advisor
- Don’t sweat the day-to-day craziness, and get out there and enjoy life!
*Source: Dimensional Fund Advisors – “Performance of the Premiums”
PLEASE NOTE LIMITATIONS: Please see Important Disclosure Information and the limitations of any ranking/recognitions, at www.fostergrp.com/info-disclosure/. A copy of our current written disclosure statement as set forth on Part 2A of Form ADV is available at www.adviserinfo.sec.gov.