2 Simple Investment Tips To Learn From Last Month

THE BIG THING I WANT YOU TO KNOW:

If you want to be successful long-term, you can’t invest based on the short-term predictions of news media or political institutions. It doesn’t matter if you’re 25 or 55, you’ve got to break out of that cyclical, short-term mindset.

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It’s July 2019. (But, I promise if you’re reading this later my advice for you will still apply.) PROMISE.


 
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PROMISE?

Yes, this is a minor shoutout to #StrangerThings because I just finished Season 3, and I’m searching to find about season 4 news, theories, and ANYTHING I can find…

 


At the end of last week, the June jobs report was released.

The market dropped.

I know what you’re thinking, the report must have looked pretty bad…but that wasn’t the case at all! In fact, IT LOOKED REALLY GOOD! And this is the backdrop for the investing truths I hope you hold onto. Let’s jump in…

but Why would the market drop in response to a good jobs report? The Short Answer: the NEWS

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A month ago, we talked about how news media are ALWAYS looking to make profit (duh) and bad news gets more ratings. That’s why there’s often a negative slant in the news and it becomes dangerous when you let it impact your financial planning. (How To Overcome The Negativity In The News & Create True Financial Security)

Back in May we were in the 104th straight month of job growth, but the news media spun it as a “spring slowdown” and “market cooling”.

Today, just one month later, the headlines sound like this:

“U.S. employers added jobs at a robust pace in June easing fears of a hiring slowdown and showing a strong labor market could propel a domestic economy facing threats from abroad.” — Wall Street Journal

Huh?!

Suddenly, the job numbers shot up in June, which is the opposite of what they predicted in May. This sounds more like, “Wow, things are actually great! Sorry if we freaked you out last month!”

Now, is it okay for me to say I told you so??

This happens all the time, and in addition to my obnoxious gloating, I want you to start to see this type of negative bias, learn from it, and invest better!

2 key investment tips you can Learn from this past month

key Tip #1 - Investing in reactivity to predictions will always bite you

Don’t take everything you read as fact. The news is people interpreting a set of data in way to get the highest ratings. All of this fear and anxiety brought about a month ago is suddenly not there anymore.

Please please please… know that when you hear about things going downhill and you suddenly become super conservative and put all your money in cash (as one client did) know that is being reactive (not trusting your plan) and that can (and often will) damage your financial future. The news media outlets are going after money and ratings, and I know I sound like a cynic, but that’s just the truth!

Instead: Invest based on your plan, your goals, your needs and not because a headline gives you the heebie jeebies.

key tip #2 - you’ve got to invest with the long term in mind

There’s a sickness that most of us suffer from and it’s desiring short-term gains over long-term happiness. We will take a short-term gain over long-term stability every. single. time.

This brings me back to the question at hand, why did the market drop in response to a good jobs report? Because the Federal Reserve won’t drop interest rates if the economy is good, and if the rates don’t drop then we don’t see extra money pouring into the market. The market is dropping because the economy is strong.

That’s so backwards, right?

So many people want interest rates to drop because they want that short-term high, but we need room to drop rates when the economy actually needs it — that’s the whole point!

Instead: Remember that you are going to win in the long-run by ignoring the day’s ups and downs and focus on long-term progress.

 
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Sadly Friends, my son is struggling with this same invaluable life lesson the hard way… learn it now.

When I give my son his allowance, he wants to go spend it right away. Literally — he has a list of things that he’s waiting to buy when he gets his money. And if there’s money in his pocket, he’s waiting to spend it immediately.

I keep reminding him that he’s going to want to buy a car in three years. When that time comes, he’s going to have to put in X amount and I’m going to put in X amount and it’s based on how much he saves. In his eyes, three years seems like eternity, but it’s really not that far off!

Do you see the similarity here? We are all susceptible to this.

It is so, SO easy to go for that short-term gain, but that can really bite you down the road.

If you want to be successful long-term, you can’t invest based on the short-term predictions of news media or political institutions. It doesn’t matter if you’re 25 or 55, you’ve got to break out of that cyclical, short-term mindset.

If you’re feeling confused or stuck or lost, our team would love to sit down with you and talk about what it looks like to plan for the long-term. That’s what we get excited about! We don’t care about your politics, we care about you reaching the dreams that you have. We’d love to start a conversation with you.

 
 
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As a kid, when you got your allowance did you save it or spend it? Has that changed today?

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