Does Your Mood Match the Market Swings?

This Week’s Ups and Downs but mostly Downs, have many people struck in terror. First of all, as of this writing, the stock market is down 2% for today. Yes, you may say but what about the week? While let’s look at the long-term picture for a better perspective. Since this time last year, the market is up. Not a lot but higher than it was on December 6th in 2017 as far as the Dow Jones and S&P are concerned.

Second, the real question is….How are your investments doing? Technology for example is up. If you have some equity diversity and bonds in your portfolio, the decline of the past few days may be balancing your portfolio to the point where the losses are not so dramatic. Look closer at what you before you panic.

Third, do you have cash? Not just in your pocket but in the bank. Perhaps as part of your asset portfolio where you can access it if you needed. Remembering that cash is one of the three main forms of investment is essential to managing your money. Despite its poor return record of the past ten years, the reason cash is always in style is for its dependability. The currency is always there and insured if parked in an FDIC insured account.

Finally, if you are truly affected in your daily life by the market swings, this is a time for a two pronged improvement to your life. One, take the time to create an investment strategy that matches your age, needs, and personality. Talk to a professional investment person who can educate you and create this for you, before making any changes. Two, do some important work on yourself by finding ways to decompress more in your life. Your health is worth it.

Meantime, know what you can control and cannot. You cannot change the market. You can change your investments. Most of all, you can lower your stress level with some good information.

Financial Myths: Your 401k Loan

The financial myth around 401k loans is purely based on emotions and not facts.  Yes, sounds good if you are going to take a loan I hear, "May as well take it from yourself."  Yourself being your 401k.

However, what employees miss is that the money in your 401k is pre-tax money.  When you pay the loan back, you use after tax money.  So you have paid taxes on that money already and will pay taxes again when you withdraw the money in retirement.   

So before you calculate in the potential growth of investments or the downside risk of not being able to pay the loan back, consider simply the tax issue.  A loan is a loan.  But who and where you take it from matters.  

Listen to the numbers not your co-worker.  Even if the new fun car is calling.....