Know Fear

Will the markets go up or will the market go down?  As an investor, fear and greed, by far are the most compelling emotions that all too often prompt poor decision making. The reality is, too many bad moves will result in portfolio underperformance and therefore have a detrimental effect on your financial plan.  But with a little understanding, your fears can actually be helpful.  The question is how will you read your fears and which ones should you listen to?

If we take a closer look at fear, the imagination is its tool.  When we are fearful of something, it’s normal to imagine what might happen… in the future.  We begin to imagine possible outcomes and all too often those outcomes are troubling.  It doesn’t take much for those with an active imagination to conjure up a future where all money has been lost and any hope of retirement erased.   

This worry about the future is significantly complicated by the number of unknowns. The more the unknowns, the more to imagine about what could go wrong.  When we don’t have enough information about something often our imaginations steps in to fill the void.  Concerns about not knowing how to manage assumptions about inflation, taxes, or portfolio management can, take the imagination to dreadful place of the debtor’s jail and residence of living in a van under a bridge.   

The capital markets are full of complexity and the average investor has every right to wonder and worry how their investments will fuel their financial plans.  If you find yourself getting carried away by the theatrical side of your fear, it may be time for a “thinking partner”. The key to navigating and managing fear is to ensure you include the coolness in judgment of a scientist when making decisions where fear is involved.  At Lake Tahoe Wealth Management, Inc., our most important job is to be that thinking partner and provide the coolness of judgment rooted in science when it comes to investing and financial planning.

This article was inspired by Karen Thompsons Ted Talk (11 minutes and 31 seconds, VERY worth the watch), where she shares an extremely insightful look at fear and how we can use our fears to our advantage by being better prepared for tomorrow.  We couldn’t agree more!  Use your fear to explore what you can do today to be better prepared for tomorrow and call us if you need a thinking partner