Why am I saving and investing?

Why am I saving and investing?

March 26, 2018
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After a week like last week, it’s an important question. There are many reasons people save and invest, including to:

• Live the life they want today and in the future
• Accumulate resources so they’re prepared for any bumps in the road
• Provide an education for their children• Offer assistance to parents
• Support a young person with a disability
• Do good in the world
• Live comfortably in retirement without anxiety

However, none of these reasons have anything to do with short-term market fluctuations. 

Last week, major U.S. stock indices experienced a selloff, and we saw a dramatic downturn in stock markets. The Dow Jones Industrial Average was down 5.7 percent, the Standard & Poor’s 500 index lost 6 percent, and the NASDAQ fell 6.5 percent, reported Barron’s.

Those are big moves for a single week. The kind of moves that light up the emotion centers of investors’ brains and make them want to sell.

It’s not a new phenomenon. In 2002, in an article for CNN Money, Jason Zweig explained the brain’s potentially negative influence on investment decisions, “But in the world of investing, a panicky response to a false alarm – dumping all your stocks just because the Dow is dropping – can be as costly as ignoring real danger. For one thing, it can cause you to flee the market at a low point and miss out when the market bounces back. A moment of panic can also disrupt your long-term investing strategy.”

So, what happened last week? In short:

The Fed raised rates, as expected. The Federal Reserve raised the Fed funds rate by a quarter of a percent, which may benefit savers and investors, but will make borrowing more expensive.
Tariffs triggered trade war worries. The Trump administration levied tariffs on China, raising concerns of a global trade war.
You’re fired! There was additional turnover among senior advisers to President Trump.
Can they do that? British news reported a data analytics firm has been influencing elections around the world in some unsavory ways.
Don’t share my data! There was news a social media firm had shared the personal data of thousands with a researcher who shared it with a third-party firm without permission.
Sigh.Another data breach. An online travel company experienced a data breach that may have exposed the personal information of 880,000 users.
The economy is chugging along. Last week’s U.S. economic releases were overshadowed by everything else, but many indicated a strengthening economy, reported Barron’s.

That’s a lot to take in over the span of five days. The critical thing is to recognize these short-term events are unlikely to change your long-term financial goals. Financial decisions, including buying and selling investments, are important and can be life shaping. They should be grounded by long-term financial goals and foundational principles of investing. They should not be based on the brain’s instinctive fear and flight response. 


LPL TRACKING #1-713276


https://www.barrons.com/articles/why-did-dow-drop-1-400-pick-your-poison-1521852744 (or go tohttps://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_Barrons-Why_Did_Dow_Drop_1400-Pick_Your_Poison-Footnote_1.pdf)






https://www.ft.com/content/e4e95b6c-2dac-11e8-9b4b-bc4b9f08f381 (or go tohttps://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_FinancialTimes-Chiefs_Hubris_Steered_Cambridge_Analytica_to_Data_Scandal-Footnote_7.pdf)



http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_other (Click on U.S. & Intl Recaps, then "Factory sector accelerates, housing prices climb") (or go tohttps://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_Barrons-Factory_Sector_Accerlerates-Housing_Prices_Climb-Footnote_10.pdf)