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PFT #79 - Personal Finance Tip of the Week: Stock Market and Inflation Capitulation
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This week’s episode is about the stock market and inflation capitulation.
At the time of this recording the stock market as a whole is 20% down from its previous high water mark and inflation hasn’t been this high since Luke and Laura were popular on General Hospital.
So when this occurs many people begin to panic about what to do with their investments.
Now this is a logical thought especially for the Millennial generation and beforehand where these people have been through the 2008 Financial Crisis, the Pandemic downturn.
The common question that we get is how do we handle our investments.
We need to start by saying that each individual has a unique set of criteria meaning one has to decide for him or herself.
With that being said, the common rule is that if you are more than five years out from needing to tap into your nest egg, then stay the course.
If you are under five years, evaluate your positions and stay the course with your goals.
Okay and if you are one-to-two years out, what do you do?
Scale down your investments to protect against downside risk or stay in cash meaning stay liquid.
The bottom line is that you need a set of goals to follow in good and bad times by staying educated or working with your financial advisor.
The goal is to build wealth through your working years and scale down as you get closer when the need arises to tap into your money.
Finally, as a credo, investing is a marathon; not a sprint. Therefore, when practicing short-term investing you have to be willing to lose everything that you put into the market; otherwise, it typically means that you couldn’t afford the money in the first place.
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At the time of this recording the stock market as a whole is 20% down from its previous high water mark and inflation hasn’t been this high since Luke and Laura were popular on General Hospital.
So when this occurs many people begin to panic about what to do with their investments.
Now this is a logical thought especially for the Millennial generation and beforehand where these people have been through the 2008 Financial Crisis, the Pandemic downturn.
The common question that we get is how do we handle our investments.
We need to start by saying that each individual has a unique set of criteria meaning one has to decide for him or herself.
With that being said, the common rule is that if you are more than five years out from needing to tap into your nest egg, then stay the course.
If you are under five years, evaluate your positions and stay the course with your goals.
Okay and if you are one-to-two years out, what do you do?
Scale down your investments to protect against downside risk or stay in cash meaning stay liquid.
The bottom line is that you need a set of goals to follow in good and bad times by staying educated or working with your financial advisor.
The goal is to build wealth through your working years and scale down as you get closer when the need arises to tap into your money.
Finally, as a credo, investing is a marathon; not a sprint. Therefore, when practicing short-term investing you have to be willing to lose everything that you put into the market; otherwise, it typically means that you couldn’t afford the money in the first place.
Social Media
https://www.instagram.com/somm.podcast/
https://www.youtube.com/channel/UChec5qcZBcGkIhUU3belNDw
https://www.tiktok.com/@somm.podcast?lang=en
https://www.facebook.com/somm.podcast
https://twitter.com/Somm_podcast
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