Wealth & Health Management

April 01, 2022

Previously published in The Bulletin, Bend, Oregon on April 23, 2022

Not that long ago, discussing one’s mental health was confined to closed doors and soft couches.  Fortunately, people today feel more empowered to speak openly about their struggles and the benefits of seeking professional assistance to help them work through the daily stressors of (post) pandemic life.  There’s no question that one’s financial situation is tightly woven into the fabric of their mental well-being.    

At the foundational level, if our basic needs of food, shelter, water, warmth, and safety are not being met then little else matters. If we’ve satisfied these essentials and we add some zeroes to our statement of financial position, then we afford ourselves the luxury of pursuing other goals.  However, this typically presents a whole new set of pressures as we seek to climb the upper rungs of Maslow’s hierarchy.

These forces, along with geopolitical tensions from the conflict in Ukraine, continued supply chain issues, increasing food and energy prices, slowing growth, rising interest rates, and fear of missing out (think crypto), etc. can weigh heavily on peoples’ minds. Add to it the financial media conditioning their audience to predict the direction of interest rates, market movements, and/or individual stock prices to be successful investors – and it’s no wonder that we can feel we’re on an anxiety-inducing roller coaster of emotion trying to manage our financial lives.

The truth is that hanging on too tight can have very damaging effects on a portfolio, not to mention our peace of mind.  If we are overly focused on things right in front of us, we can lose sight of the bigger picture.  That’s not to say that having a good grasp on one’s income and expenses or following a budget is not critical to any successful plan because it absolutely is.  But if we hang on every bit of news or information that comes out, we are liable to feeling like we need to do something with it or do something about it. We react impulsively instead of taking time to process the information objectively and decide if it has any meaningful impact on our goals and long-term plan. Often it won’t, because changes to our plan should be dictated by changes in our personal situation such as retiring, selling a business or property, getting married or divorced, having children, losing a spouse, etc., and not the constant gyrations of the market.

If we have a healthy relationship with money and know the difference between what’s interesting and what’s important, we can avoid harmful behaviors like selling at the wrong time, paying too much, being overly concentrated in a small number of stocks or sectors, and being swayed by outside opinions. We should tune out the noise, stop trying to outguess the market, or predict the next recession. It doesn’t mean we like seeing our account values decline when the news turns negative, but we can accept that it’s part of being a long-term investor and believe that human ingenuity and companies’ abilities to adapt and innovate will ultimately propel markets to new heights.

Those who wrestle with this notion would be well-served to let go and seek the assistance of a financial professional with the expertise to help formulate a plan and the discipline to stick to it. Otherwise, the emotional turmoil inflicted by the market could result in one seeking the assistance of a professional with a comfy couch.