The magic of technology has brought us a brand new risk…”headlines risk”. That is, the risk of reacting to media hype and headlines instead of following your long-term financial plan. While newspaper and magazine headlines have been around for more than two centuries, the urgency and ability to act immediately is new. “Headlines risk” may, in fact, be the primary difference between financial independence and endless financial frustration.
One of the hardest truths for some to accept is the long-term planning horizon. Our minute-to-minute short-term world seems deeply at odds with adopting and following a long-term strategy, yet this approach is essential to long-term financial success. There will always be broad economic conditions and specific investment markets that, in the short-term, produce anxiety. The ups and downs of the market are of little importance, however, to investors with plans for their portfolios that stretch decades into the future.
The inputs that have the most impact on financial futures are what you save and what you spend. The headlines of the day can easily chase you down an errant path and before you realize it, big financial mistakes have occurred. For those in their peak earnings years (generally late 40’s-early 60’s), headlines risk can be particularly painful if this causes a slowdown in saving just at the time when the ability to save is highest.
Are your aspirations for the future in danger of being derailed by headlines? Ready for a real conversation?