Rollercoasters…Dangerous or Just Scary?

We are all adjusting to life in a pandemic: donning a mask, working remotely, and bearing stock market volatility. 2020 has been a rollercoaster.

Personally, I love rollercoasters (of the amusement park variety). The twists, drops, and turns are exhilarating. While the upside-down loops can be a bit scary, I know I’m not in danger.

The pandemic has brought new twists and turns to our lives: some are scary and dangerous (a highrisk individual contracting COVID-19), and some are scary but not necessarily dangerous (juggling a career while homeschooling kids). Distinguishing between what is fear-inducing and what is truly dangerous is important and has real consequences.

Fear is a dangerous motivator for financial decisions. We all know a “fight or flight” response can help us in dangerous situations. But if we are not in danger, fight or flight reactions may be detrimental, particularly when it comes to our money. When we feel scared, thoughts like “the stock market is plunging!” or “The stock market is hitting all-time highs while our economy is crumbling!” can guide our financial choices. Fear makes us feel like we need to do something, to take action, even if we aren’t acting on sound guidance. Trying to time the market based on gut instincts to avoid market drops can also prevent us from riding the market highs. Most stock market wounds are not from companies bleeding money; “most stock market wounds are self-inflicted.”

I bet your biggest financial goal isn’t to leave this earth with as much money accumulated as humanly possible. If, instead, you want to use it for the benefit of yourself and the people and causes you care about, the best thing you can do is to plan for how you want to use it. That plan will be the driving force behind your future actions.

When my dad was teaching me how to drive, we’d go to a parking lot to practice three-point turns, backing up, and parking. If my dad asked me to drive him somewhere today, I wouldn’t go to that parking lot and drive around aimlessly, I’d ask him where he wanted to go. Because I know how to drive, it’s useless to get in the car without a destination. Likewise, it’s pointless to invest your money without a plan for how to utilize it.

If investing doesn’t make you feel empowered and prepared, then you need to talk to a professional financial advisor. At Pathfinder Wealth Consulting, discovering your financial goals and crafting a customized investment strategy to help accomplish those goals is our area of expertise. All of our wealth advisors have obtained the CERTIFIED FINANICAL PLANNER™ certification and we have helped people ride the rollercoasters of the last three decades, including the dot-com bubble, 9/11, the Great Recession, Brexit, Chinese trade tensions, middle east conflicts, natural and nuclear disasters, changing politics, and the coronavirus pandemic. And we expect to face more rollercoasters in the future – but we know how to help people ride through them without danger.

Almost all major life decisions, including financial ones, can be scary, but they don’t have to be dangerous. We are here to guide you forward.

This Insights article is contributed by Kayla Willliford Johnson, Financial Planning Associate at Pathfinder Wealth Consulting.