True Reflections: My Investing Mindset

Xiomara Lorenzo

By Xiomara Lorenzo
As former Director of Society of Grownups, Xiomara brings together deep expertise with consumer-focused investment and retail banking research, while wearing the latest in 3D printed fashion.
Posted on 02/04/2018

Does anyone else have whiplash? When it comes to the stock market, it feels like one day we're cruising along, and the next day we're at a screeching halt…or even going in reverse. If you're like me, you probably have some of your money invested for specific goals—which makes ups and downs in the market frustrating, and sometimes a little scary. No matter what goal you're investing for, anxiety is sure to develop somewhere along the way. So what do you focus on? A great day when the markets are up? A news-crazy day when the market dips?

Focus on the big picture

When it comes to my retirement savings, I choose to focus on the big picture. I know I'm in it for the long haul. So when it seems like the investment world is starting to panic, I've trained myself to take a step back and refocus.

We all remember the most recent financial crisis. Many of us were looking for jobs at the time, and many others had to postpone retirement. But then we saw another surge that started in 2009 and lasted through this February. All of a sudden, we saw a major dip in February that caused widespread panic.

But even though I've trained myself to refocus when the financial markets fluctuate, I still find it difficult not to log in to my accounts just to check. And in that moment, it's really hard not to panic and make changes.

But no matter how much I have to sweat it out, I know staying the course is still the best strategy for me.

Remember why you're investing

I was fortunate to begin contributing to a 401(k) when I was 21 years old, so I got started early and have had at least a couple of years of contributing and taking advantage of my employers' matching programs. And when I switched jobs and got married, I opened a Traditional IRA to act as a bucket to consolidate former employer plans. For my wife and I, it's more convenient than having multiple accounts out there in the financial universe.

Watching this account grow over time has been a source of pride for me. Even though the investing road is rocky sometimes, my savings represents being able to take care of myself and my family in later years (especially when it is not clear how Social Security will play out by the time my wife and I are ready to retire).

Don't panic

So when you start seeing some negative financial headlines like this February and you feel yourself start to panic, remember to take a step back. It's difficult to do in the moment, but trust me, practice makes perfect. Take a look at the big picture, and remember that long-term goals, such as retirement, may be far enough away that these short term market fluctuations may just be a bump in the road.

I've heard some of the financial planners on our team take this "Don't Panic” strategy a bit further. They've mentioned instances where they recommended that clients ignore the urge to log into their investment accounts during tough financial times. I'm not sure if I have the willpower for that, but it's a strategy that may help you avoid the stress of what a fluctuation may be doing to your accounts.

If that doesn't work for you, remember this: making contributions to your account during a market dip means you're buying investments at lower prices. And over the long term, that could help your accounts (remember, "Buy low, sell high”…?).

Consider taking a goals-based approach to financial decision making. That means identifying and prioritizing your goals, and making sure your investments are in line with your risk tolerance. You shouldn't be losing sleep because of your investments. That's a good sign you may be taking an approach that's too risky for you.

If you want to learn more about using investments as a tool to help reach your goals, be sure to tune into our online course: Basics of Investing.