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By Debra Ohstrom, CFA
The benefits of being in your 50’s, (that sounds so old to me) and I don’t feel like I am that age but it’s true and I think it has a lot of advantages.
I have been through quite a few market downturns and recessions in real life and learned a lot by
observing the history of stock market data over the past 100 years. Fortunately for me, I still have time before I retire to put what I have learned into practice. One thing I have learned is that recessions and market downturns are a necessary part of the natural cycle of business, the economy and investing. If you can use these periods to reassess your goals and readjust your money habits, you can set yourself up for success down the road.
Remember even the tough times shall pass and we emerge stronger. There are many good things that come out of tough times. We can take a step back and reflect on what brought us here and how if we keep a long term perspective we can make some adjustments, reposition our life and goals so we are prepared and in in a better place when life moves forward again.
Those principles apply to business, economies and our money too. The world is going through an
adjustment that while a bit painful in the short term, gives us time to rethink, readjust, define what is important to us and put our energy and money in a direction that will make us stronger. The growth period will come again, it always does and though it may look a little different, it will happen.
Now is a great time to track your spending since sometimes when the money is flowing freely we forget about keeping up good habits. That is why these tough patches can help us get back on track.
If we use this time to have more intention around our spending and saving, we can start investing for growth and really benefit when the economy turns around. The stock market usually reacts much quicker to economic changes and anticipates changes around 6 months ahead of time. That is why you need to think about finding ways to keep up with investing so you are benefiting when the rebound happens, and it will.
It can also be a good time to see if your money plan is up to date. Have you had any life changes over the past year? Gotten married, divorced or had children? All of these things and more can require tweaks to putting together a plan that is right for you.
I have created an online course to give you all the tools you need to create your own Financial Plan and understand what the guidelines are to make good Financial decisions. You can check that out HERE I often use the analogy that your Financial Health is similar to your physical health. It starts with assessing where you are now and then defining goals as to where you want to be. This way you can map out a path to get there.
Every year it can be really helpful to have a Financial check up to see if your financial plan needs to be adjusted. You can assess if you have enough emergency savings, or are you investing the right amount for your retirement or other goals. This is similar to getting a physical check up once a year even when you are feeling great. It helps you get ahead of any bumps in the road and can make sure you are on the right financial track.
Sometimes unexpected things in life arise and making some adjustments to your plan can help you still get to where you want to be.
Another important thing to be aware of is that many people have a lot of negative emotions around money and don’t even realize it. Some people think building a money plan is complicated or
overwhelming and it really doesn’t need to be that way.
Often these emotions can come from our childhood and how our parents felt about money. I know this personally growing up from watching my mother have a lot of anxiety around money which can drive someone to make decisions that only help them in the short term. Money and building wealth is really a long term game plan.
The younger and sooner you get started the easier it becomes to reach those millionaire status goals. It only takes finding a way to put monthly contributions into an investment account with the right mix of low fee index funds to get started. It isn’t all that different than building your healthy meal plan with the right combination of proteins, carbs and fats to fit your needs and goals. With investing you just need to understand the right mix of stocks, bonds and cash that fits your needs and goals too. The best part is that you don’t need to pick your own specific stocks or bonds anymore. You can choose a basket of investments that does it for you and that is what I teach.
A lot has changed in the investment world in the past 5 years to make it less expensive and easier for everyone to get started on their own for building their long term wealth. The issue is that most of the articles and social media posts are all about get rich quick schemes and short term trading so most people don’t realize that is the worst way to invest. If you can remember that the stock market doesn’t go up in a straight line and your money will grow on average annually about 8 to 10% over a ten year time frame then recessions and down markets will not be so frightening any more. The down markets actually become viewed as an opportunity to invest in profitable companies at a cheaper price then before.
It just takes a little bit of educating yourself so you can get started investing and think long term.
Bye For now,
Debra
Debra Ohstrom, CFA
Founder | DebraOhstrom.com
I offer the Womenhood community a $50 discount on my courses and if you have any questions, feel free to email me at debra@debraohstrom.com
About the Author
Debra has worked in the financial industry for over 27 years at firms such as Merrill Lynch, Morgan Stanley, Citi Private Bank and Allianz Global Investors. She has worked in different roles such as research, asset allocation and account management. She has an MBA in Finance and the Chartered Financial Analyst designation. Debra created her education business, DebraOhstrom.com to help women get the education they need to become confident investors and be in charge of their financial future.
Debra Ohstrom, CFA
Founder | DebraOhstrom.com
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