Want to Learn How to Invest? First Step: Turn Off the News

Want to Learn How to Invest? First Step: Turn Off the News

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Let’s not kid ourselves: investing can be intimidating. It’s one of the only times you lay your money on the line for something completely intangible — something that can, if worst comes to worst, evaporate completely.

So it makes sense that most turn to outside sources like advisors for advice on how to make good investments, or even whether or not they should be investing in the first place. Unfortunately, the most accessible information isn’t always the best. In fact, in some cases, it’s a straight-up recipe for disaster.

Here’s Why Watching the News is *Not* a Good Investment

I’ve heard it time and time again from my clients: the deluge of urgent, surprisingly-specific questions regarding their portfolio allocation.

“Do you think my investments are aggressive enough? What about buying shares of Big Company X? My neighbor doubled his money last year; should I be doing something different?”

Or, perhaps even more frequently:

“I’m thinking we might want to pull back a bit until things even out. What do you think about a CD… or even just putting the money in the bank instead?”

If I ask where these fears — because that’s exactly what they are — are coming from, I usually end up hearing the same answer: the news. Seemingly, it doesn’t matter the media source or if it’s something you saw linked off social media; our ever-present news cycle is by impression basically a financial fear factory.

How the News Feeds Your Emotions

It’s funny when you think about it. Just a generation ago, there were only two news programs to tune into: the 6 o’clock and the 10 o’clock. Finances were just one part of the reporting, offered in the form of a few sound bites and the Dow Jones Industrial Average scrolling across the screen.

These days, though, there are entire channels dedicated only to news. They have to fill their airspace 24 hours a day, seven days a week. And it’s in their best financial interests to keep you watching.

So what do they do? They cater to your emotions — sometimes fear — to keep you constantly on the edge of your seat, terrified to turn off the TV lest you miss out on some critical piece of information… never mind the fact that the information in question, even when true, is often heavily spun.

Don’t believe me? Try ditching commercial news for a week and then sitting in front of any flavor of news channel for an hour. Chances are it’ll take only a fraction of that time to feel your blood pressure increase. (Which is, by the way, why I don’t keep the news on in my office lobby. Money is stressful enough for some without a pundit screaming at you about how you should be buying or selling some specific stock.)

The thing is, bad news is good copy. And that’s unfortunately one of the reasons many investors are failed investors.

Fear or Greed: Is It Really So Black and White?

If you’re to believe the popular media, investing is a bipolar practice: black and white, defined by the twin evils of fear and greed. No matter what the market is doing, your money is constantly in crisis: you’re either missing out (buy buy buy!) or about to lose everything (sell immediately!).

The worst part is, this sometimes leads to confounding suggestions — like an unfortunate clip from the Wall Street Journal in 2010 covering the plight of the Potyks. This retired San Antonio couple had weathered the 2008 and 2009 lows, only to suddenly sell all their assets after the one-day “flash crash” of May 2010.

Let me repeat that: a one day blip caused these people out of participating in what turned out to be one of the greatest bull market runs of all time. And the Journal’s messaging supported that nonsense at the time; the article’s key takeaways seem to be that everyone was selling their stocks, and rightly so, thanks to the market’s volatility.

But that advice is like some crazy Opposite Day shenanigans here in Rational Investing Land — because the last thing on earth you want to do is to sell low (or buy high). Which, after all, we seem to understand in other financial situations. Homeowners don’t tend to sell their homes if they learn the property has dropped 20% in value.

Practical investing is about playing the long game, holding out through all the ups and downs for modest, long-term growth that can help position your financial future.

And modest, long-term growth is… well, kind of boring. It doesn’t make for a great headline, like fear or greed do. (And that greed, by the way? Just another manifestation of fear — a fear of missing out on a quick and unlikely fortune.)

A Financial Advisor Can Help You Invest with Confidence, Feel Good about your Money and Take Care of Your Nest Egg

The news is a wonderful resource in many ways, and a critical institution in our democracy. But it is not necessarily the right place to turn if you’re trying to learn how to invest or take care of that nest egg you’ve worked so hard to save

I’m not just telling you this because it’s how I earn my living. I don’t want to see you lose out on your nest egg just because the news is scary! (Which it is — because it’s specifically designed to be.)

But that doesn’t mean you’re totally on your own, either! Qualified financial professionals can help you make the most out of your wealth, both now and for the future.

Here at Align Financial, our professional staff is dedicated to creating the best investment strategy for you — one that can weather the test of time, and which makes subtle adjustments rather than drastic changes.

By offering you a fresh and well-studied perspective, we can keep you on track to meet your ultimate financial goals, and to enjoy the wealth you’ve worked hard to earn throughout your lifetime.

There’s no such thing as a guaranteed investment, of course, but we can promise you this: our goals have nothing to do with pandering to your emotions, and everything to do with putting your money in your pocket, where it belongs.

There’s no such thing as a guaranteed investment, of course, but we can promise you this: our goals have nothing to do with pandering to your emotions, and everything to do with putting your money in your pocket, where it belongs. You can learn more about how and who we help here.

Have questions about how prepared you and your money are for whatever the next headline might be? We might be able to help! Contact us today to connect.

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Tanya Nichols, CFP®, CDFA
Tanya Nichols is a fee-based CERTIFIED FINANCIAL PLANNER™ professional and Certified Divorce Financial Analyst located in Duluth, MN and serving clients across the country. Align Financial takes a simple but deeply impactful approach to wealth management, connecting your money to your life in a way that feels right to you.

Any opinions are those of Align Financial and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. 

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Past performance may not be indicative of future results. There is no assurance any of the trends mentioned will continue or forecasts will occur. Holding investments for the long term does not insure a profitable outcome. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. 

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow”, is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. Inclusion of these index is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. 

Hypothetical examples are for illustrative purposes only and based on information believed reliable. Individual investor’s results will vary. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.