A letter from our President: the fear mindset

Investing4

Hello to you!  Though it feels like summer, the Fall season approaches quickly.

Have you been watching the news this summer?  There is a downside to the 24/7 information age.  We are bombarded constantly with headlines worded to grab our attention – the more sensational, the better. One could get the impression that everything is a crisis, and that all issues demand our immediate attention.

This does tend to create a fear mindset, which may hold us back from making good decisions.  Specifically looking at the financial front, the fear instilled under this crisis mentality may deter us from committing to a solid investment plan.  Fear of losing money keeps us hunkered down with money in the mattress.  We need to look at the fact that our fear may actually cost us.  Almost half of us do not have any money in the stock market right now, due to a fear of losing money. 

Historically, the stock market from 1926 through 2012 has returned nearly 10% annually.  After a period of under-performance, the S&P 500 has rallied over the last few years and this year alone is up about 17%.

We cannot let fear of losing money, or fear of an uncertain future cloud our judgment.  From a financial perspective, the way to get through the fear is to make a prudent plan, and diversify, diversify, diversify.  If the bond market moves against you, you will have other elements of your portfolio to hold you steady.  If the stock market experiences a correction, your bonds, commodities, or real estate will be there to offer balance.

Building diverse investment portfolios for you to provide you with the highest probability for a successful outcome.  That is the best antidote to fear and uncertainty.

Ann P. Wiesbrock, CFP®

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