Can we talk about peace of mind during a recession?
Now, depending on which economist you ask, the U.S. is either already eight months into a recession or just entering a recession. Yes, the economic sentiment among even the ‘experts’ is that inconsistent.
To be clear, economic recessions and market strength are not correlated. The stock market and the economy are two distinctly different entities. Do economic reports potentially affect investor sentiment and activity? In some cases, yes, but on principle, the stock market and the economy are not tied together.
That said, should an economic recession change your investing approach? More importantly, should it cause you stress and anxiety? I propose to you that you can answer this question consciously for yourself, and that your life will be better if you do.
The Cambridge Dictionary defines “peace of mind” as “a feeling of calm or not being worried.”
How much is worrying about the economy costing you right now? Not necessarily in financial terms, but in terms of how you’re spending your time, energy, and attention.
If you’re spending an exorbitant amount of time, energy, and attention wondering what may happen next in the economy, that sounds expensive. Because time is the most valuable currency we have.
When creating financial plans, my team of financial advisors plans *for* recessions and market volatility for one key reason…
Markets are meant to grow and shrink.
We cannot control the exogenous outcomes, nor should we try to time the market by predicting where it will go next.
The Federal Reserve has entire groups of brilliant economic minds who still cannot predict economic trends with any type of consistency! It’s simply too random.
One of the most valuable things we can provide our clients is optimism and peace of mind. Specifically, we value giving some perspective about long-term investing to support your growing money mindset.
Practicing long-term investing habits, not simply saying you’re a long-term investor, is vital for your financial future. Who you say you are as an investor and who you actually are as an investor need to be fully aligned for your long-term investment success.
Being a long-term investor in practice changes how we see the market and the economy. As a true long-term investor:
- You recognize when emotions are affected by headlines and other people’s activities.
- You know why you have a good financial plan in place that plans for economic downturns, even recessions.
- You lean into the wisdom of evidence-based investing. Data has no bias, but people do.
- You trust the perspective of your financial advisor before making an emotionally influenced investing decision.
The practice of alignment is the secret to true peace of mind.
This is what will bring you a sense of calm, quiet confidence whenever the markets take a tumble. This will help insulate you against worry and fear when economists wring their hands over the next jobs report, inflation markers, or GDP numbers.
Are you a long-term investor with a good financial plan that accounts for recessions and market volatility? Does how you’re spending your time, attention, and energy support that belief?
If your beliefs and investing habits are out of alignment, I want you to feel supported, not judged. It’s easy to let our feelings affect our money habits. It’s what you do with that realization that can be the difference-maker as an investor.
