Ditching the Media Mentality
Hollywood and the media have done a fantastic job of glorifying investment banking, so much so that some individuals have an unrealistic idea of what investing should be. In today’s world of instant gratification, the financial markets seem to generate quick money. Certainly, there are individuals who have worked hard and made it in finance relatively quickly, but for the majority that will not be the case.
I titled this article “Ditching the Media Mentality” because many people get advice from media outlets and trust them at face value. Not only that, but it promotes quick investing positions when one day they say stock XYZ is good and the next week say why you should sell XYZ. Jumping in and out of positions not only make balancing a portfolio difficult, but promotes reactive behavior when long-term investing involves a disciplined approach, no matter what the day-to-day movements of the market are.
That being said, for the 99% of people reading this, I assume your goal is to build wealth for retirement and beyond. If that is true, then you need to avoid the media mentality and formulate a solid investment plan that you believe in. The key phrase here is “believe in”, because the market will expand and contract, putting pressure on your portfolio. However, a well-balanced portfolio should be able to withstand much of what the market will throw your direction.
The first way you can go about achieving this is to write down your financial goals. Individuals know they must save for retirement, but what exactly they are saving for is unknown. You should have a plan of what your lifestyle may look like, and strive to achieve enough to fulfill that lifestyle. It’s alright to not know, especially in your 20’s and 30’s, but you should have a general idea, so you can formulate a respectable game plan.
Secondly, once you’ve identified your goals, begin building a portfolio. History and research has shown that passive investing typically beats active investing. Should you choose the route of passive investing, you will likely want to find a few low-cost mutual funds or ETF’s that you can add to little by little. These positions should be reviewed at least annually to ensure everything is on track. If you have any questions, always reach out to a financial advisor and they can offer their professional opinions.
Lastly, stick to your guns and ditch the media mentality. When the market begins to turn against you, ensure you have faith in your plan because history has shown the market typically comes back stronger after a recession or depression. There are formulas out there that compare if you rode the storm or withdrew your money and invested after the fact, and you would be amazed and the differences.
Ditching the media mentality will bring you peace of mind. Also, there is no need to jump in and out of positions. Stick with your plan, find low-cost funds, and you should be ready to build a retirement or even life-changing wealth.