A quick study between the difference of a Problem and an Inconvenience.
Miley Cyrus, Oprah Winfrey, Lamar Odom, dog, Jack Daniels, and Breaking Bad are the top searched topics on Google for the week. Financial planning is a pin drop compared to the amount of times people search for these other items. The number one searched item for this week includes the word “Problem” and “Scandal”. This past week for me has been all about reflection, and although I also enjoy learning new things, I prefer those things to be as meaningful as possible. This week’s Blatt Watch is about using financial planning tools to determine what is meaningful and what is an inconvenience.
South Florida always has rainy afternoons in the summer. This has been for as long as I can remember, and I have been in South Florida for over 22 years. A lot of my clients would come in and complain about the weather. Normally, I would not correct them instead, I would just listen and the topic would move on to something else. This bump in the road that we call the weather of South Florida, in my mind, is equivalent to slight market fluctuations. When the market goes up or goes down within a 1% range, it’s an inconvenience. When the market declines more than 3% in a one week period, it becomes a problem. If the market declines and crashes like it did in 2008, where the S&P 500 lost over 37% in one year, it is a major problem. The question that you need to ask yourself when investing in the market – “is there going to be an inconvenience coming, or a major problem”? If you are having a hard time dealing with major problems in your life perhaps direct investment in the stock market is not your best idea.
If you are dealing with several inconveniences in your life successfully, then you can handle slight bumps in the market. There are alternatives – guaranteed and conservative investments that do not decline when there are problems in the market. A good way to determine your risk tolerance for investing is whether minor things or inconveniences in your life upset and paralyze you, then you should not be in the stock market at all. If you’re facing major problems in your life right now and one more problem will push you over the edge then maybe the market is not for you. If you’re able to handle what life throws at you and you feel like, or need, growth then the stock market might be for you. Determining how you handle what life throws at you will help a good financial advisor understand your true risk tolerance. I encourage you to have this discussion with your financial advisor.
Miley Cyrus, Oprah Winfrey, Lamar Odom, dog, Jack Daniels, and Breaking Bad are all the most popular search terms for this week on Google, they are all much more popular than financial planning in Palm Beach Gardens, Florida.
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