Stocks go up and down. The price of oil does, too. And they do so regularly for all kinds of reasons, some rational, some not so much.
When stocks go up and oil prices go down, people feel rich and some think they’re savvy investors.
In times like this when stocks go down and oil prices go up – with both possibly going lower and higher for the foreseeable future – people panic.
But right now the only people who should be panicky are those without a plan.
I wrote a column on money in the New York Times for 13 years and here’s something that’s always true: people with a plan can weather the ups and downs of a market cycle. People without a plan start to think that they’re professional investors, and then do all kinds of foolish things. Even when panicky people guess right on when to buy something, how often do they guess right on when to sell it? GameStop anyone?
In April 2020, as the severity of Covid 19 became clear, there was wild and frightening volatility in the stock market. Our financial adviser asked us how we were feeling. We said fine. He said some of his clients were asking about a simple but slightly esoteric strategy to cap their losses (which came in exchange for capping gains). We passed because 1) no one ever has a crystal ball and 2) money in an investment account isn’t something anyone should need for years. (If you need it sooner or for an emergency, keep it in a savings account.)
So what should you Lead Dads do right now? Stick to your plan.
And if you don’t have one? Get one.
Or at the very least talk to a certified financial planner who can help you make some adjustments so you can sleep at night and put you on track for a more solid financial future.
But, you say, you have extra money and want to invest in something right now? Here’s a tip: pay down your mortgage – that’s a guaranteed 3-4 percent return, depending on your interest rate, and it’s risk free. After all, Lead Dads always need a roof over their heads!