S2E10 - Handling Market Anxiety

Q: What was the impetus for living with financial anxiety?

Many people's biggest stumbling block to success is that they act out of fear.

When it comes to financial planning, this manifests as the fear of not having enough money.

The key to overcoming this is to find an investment strategy that allows you to enjoy life and make sound decisions without being ruled by fear.

We can't completely conquer our fears, but we can learn to live with them and make them work for us instead of against us.

Q: How do you deal with what the market is doing right now?

When money no longer has a hold on an individual because their essentials are covered, they can view everything as an opportunity.

The goal is to have stable finances so that one can laugh at market fluctuations and view them as opportunities.

Q: Can you make money in the market without taking on risk?

You can never eliminate your risk, but you can change what type of risk you have.

When we talk about the risk of running out of money in retirement or not being able to put food on the table, we need to make sure that's not a risk when we invest in the market.

If the risks we're taking on are risks that we're okay with, then we'll be able to sleep at night.

There are lots and lots of ways to manage your downside, including getting contracts and contractual obligations so that if the market goes down, you have a buyer who will lock in your downside and limit your losses or absorb your losses or transfer your risk.

Q: How do you limit your downside as an individual advisor?

There are two basic ways to do it as an individual investor.

The number one is you find someone else who's willing to take on the risk, and you can do that using something called a buffered product or structured note or options.

And so these are essentially people who are willing to take the other side of that risk.

And so you say I don't want the first 10% of losses in the market. I don't want the first 20% of losses, right, which is where the vast majority of losses occur, right?

So you. Whatever that number is, I want you to absorb that first percentage of losses, and there are people who will take the opposite side of that bet any day, and in exchange, they'll say you don't get all the upside, right?

If the market goes up more than, let's say 10% or 15%, or 30%, whatever that number is.We want the upside on that. And you say, Okay, that's a deal I'm willing to take.

And it's constantly changing what those numbers are. But you find numbers that are comfortable with you, and you find a willing participant, and that's it.

Insurance companies have made a living out of doing that exchange over and over again.

Banks, right? CDs used to be the way to do that. They've become harder and harder because interest rates were really low. . now that they're coming. CDs are another way of doing that.

Structured notes, which is they're exchange-traded products. So I like to think of them as private annuities with more volatility that you can buy and sell. You can buy them. And there's lots of providers who, who have different versions of them. So it's just a matter of finding what you're comfortable.

Q: How do you stay disciplined?

So this goes back to the initial discussion of living with financial anxiety. It is something that we have to accept – the highs and lows are part of participating in the stock market.

The only way to not be beholden to the stock market is to make sure that our livelihood and enjoyment of life are not tied to it. We need to be confident that our essentials will be taken care of no matter what happens in the market.

Once we realize that our future isn't tied to the stock market, we can see it as a game or a casino and something for us to win.

Q: Is there a safe way to invest in the stock market right now?

Absolutely.

There is a safe way to invest in the stock market, and safe is relative. You're giving up either upside or time or you're accepting a certain amount of risk. But what is safe for me and what is safe for you is a different thing.

The Key is to find the strategy and the numbers that work for you. And we have a process for doing that for our clients. If you're interested, reach out to us. I'm more than happy to walk you through that process. But there are lots of ways to participate in the market and feel safe.

Q: Any recommendations on how to learn more?

If you have any questions feel free to book an appointment or email us at [email protected]