Check Your Fear at the Door

And maybe put the remote away once in a while

Key Takeaways

  • Fear sells, and that’s why it’s one of the most powerful tools used by the financial media and others who have an agenda.
  • Next time a disturbing story comes out, separate the fact from the fiction and make sure your own financial structure is aligned with your goals.
  • With the right structure in place, you’ll be ready to withstand the next multiyear down cycle and will be poised to take advantage of it when the recovery inevitably occurs.

*** Remember this is National Estate Planning Awareness Week

Contact me any time if you’d like to discuss your estate planning needs or know of someone who could use a complimentary second opinion about their finances.

Some of you may remember Orson Welles’ infamous “War of the Worlds” radio hoax back in 1938. He told listeners that a Martian ship had crash-landed in New Jersey. Scores of people ran to police stations fearing gas attacks and many more were treated in hospitals for hysteria and shock.  The power of fear is amazing, and equally amazing is the way our media manipulates it.

Suppose I told you the “amero” was going to replace the U.S. dollar next month? Suppose I told you billions of dollars—all in $20s—were being printed and stored in a secret Federal Reserve bank so the government would be ready for a run on the banks during the next economic crisis? Suppose I told you gold was about to triple in value because the whole economy is heading downhill and poised for a meltdown? You’re probably not taking me seriously, but way too many folks believe these kinds of rumors.

Fear sells big time. Just look at all the media coverage of ISIS, Putin, Ebola and a variety of other things. Round-the-clock coverage from every possible angle. But just a few years ago, it was a completely different set of worries that you never hear much about anymore.

So, when you’re looking out for the economy and your investments and wondering if we’re going to have another major financial crisis, you have to balance these fears against reality.

Balancing fears against reality

Look at your holdings as goal-based investing with a structure.

  1. Do you have a year’s worth of expenses readily available in cash, money market accounts or checking accounts? Do you have enough cash to cover any major one-time expenses coming up in the next 24 months?
  2. Do you have 3 to 10 years’ worth of required expenses sitting in intermediate-range investments?
  3. Do you have investments earmarked for long-term financial goals, and are those investments keeping up with inflation?

Is your structure set up to keep meeting your goals when we have another dip in the markets or the economy? Eventually we will; just don’t get scared into making hasty decisions by the fear-mongers in the media. And don’t believe all the hype about the current administration driving us to ruin. That’s been around since the time of the Founding Fathers.

Take everything with a grain of salt. Make sure your financial structure and goals are in alignment and you’ll be fine when the next calamity hits. Even if we switch from dollars to ameros.

So until next time, enjoy!
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