Editor’s note: This question was submitted before the massive downturn of Aug. 21 and 24. We regret that the answer wasn’t posted earlier, but the advice remains very, very valid.
Q. I get very upset when I see stocks go down. Like, I can’t sleep. I can’t afford a financial planner to manage my money. What can I do so my emotions don’t get in the way?
A. If you’re invested for the long-term, and if you’ve taken care to select the asset allocation that’s appropriate for your goals and risk tolerance, you have to stand firm.
While all the noise can be hard, if not impossible, to block out, you simply need to choose not to look at your account balances.
“The stock market is a heart attack waiting to happen if you look at it daily, so don’t,” said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton. ”Over a period of time it will go up, so let it do what it does.
Lynch said you should shut down the online access, don’t look at updates on your phone, and just look at your quarterly paper statements.
This strategy will help take the emotion out of it.
At the same time, you need to understand your “pain” threshold, Lynch said.
“Some funds are more conservative than others,” he said. ”For example, emerging markets are generally more aggressive than large U.S. value stocks.”
If you want to be more conservative, for example, you can use a fund that is part stock and part bonds, for example.
To help analyze the volatility of your investment, look at how it performed in 2008.
“If you can’t take that drop and remain invested — and consistent — then choose a more conservative fund that is within your pain threshold,” he said.
At the same time, be sure not to sell in the middle of a downturn. Any losses of the previous days and weeks are only paper losses — until you sell.
As for not being able to afford a financial advisor, you may be wrong there. While some advisors charge annual fees based on the amount of assets managed for clients, others work on a fee-only basis. These advisors sell their advice only. Some work on an hourly basis, and others charge a flat fee to create a financial plan for you. They can help you select investments that are appropriate for you, but not make those purchases on your behalf. They sell advice only, and then you can make the purchases on your own — but now armed with a professional’s recommendations.
If you feel you need professional help but you can’t afford it, consider participating in a free money makeover with NJMoneyHelp.com. Just send an email to moc.p1516101071lehye1516101071nomjn1516101071@ksa1516101071.
Email your questions to moc.p1516101071leHye1516101071noMJN1516101071@ksA1516101071.