One of the realities of investing that we know all too well is that the markets and the value of our investment portfolios never stay the same. This seems pretty obvious to many, but somehow, no matter how much or how little experience we have as investors, there is always an element of surprise when we check our portfolios. after hearing a news headline telling us that the markets are down, and sometimes by a lot.

Yet the very nature of this uncertainty means that no one, not the pundits on Wall Street, not the pundits on TV news, not the people in your Twitter feed, knows what’s going to happen next.

As an investment manager and financial planner, this surprise can also sometimes happen on my side of the desk. I spend hours in front of monitors with flashing headlines, tipsters prognosticating, and attend video calls with fund managers and research analysts to stay on top of current events that may impact portfolios. of my clients. I’ve been investing money for clients for over 25 years, and yet checking my own portfolio can still be a little surprising when I see the impact negative news has in actual dollars and cents. Up close and personal, I understand how uncertain times can affect the emotional well-being of investors.

I’m fortunate to have spent years in the throes of market uncertainty and am conditioned to remember that bear markets don’t last forever. My investment background certainly helps to mitigate the impact of the emotional roller coaster inherent in long-term investing. But investment know-how is not the only thing that helps us weather the volatility of our investment portfolios. Have a well-diversified investment portfolio (don’t put all your eggs in one basket) and avoiding emotional financial mistakes (have a trusted financial advisor) are particularly important in times of economic uncertainty.

What investors really need to stay on track

What else do you need to weather the emotional tides of investing? You need a plan. Not just a well-diversified investment plan, but a comprehensive financial plan that periodically tests, assesses, and projects your financial security under a broad mix of current and possible market scenarios. You need to know that if your fears come true and the markets stay low for a while, will you be okay? Will you be able to maintain a lifestyle similar to the one you led before the markets started falling or falling even further? Or, to take things to the extreme, will you have money left over when the dust in the market settles? This last question really tests the mettle of our perceived financial security.

So how does having a financial plan answer these tough questions? The financial planning process forces you to consider what you are spending now, what you want to spend later, and how long the money you have saved will last under various market conditions. The planning process also asks you to prioritize spending based on how you think you want or need to spend your money for the foreseeable future. Once your “needs” versus “needs” become clear, it will be much easier for you to reduce your expenses when the time comes. You are indeed testing the strength of your emotional and financial well-being. before the market downturn is occurring, giving you time to make thoughtful adjustments in your short- and long-term spending goals and savings habits. This, in turn, will promote a greater sense of control over the many external factors that are truly beyond your control.

What are you waiting for?

What if you don’t have a financial plan and are worried about your long-term financial security? What if you’ve always thought you’ve got plenty of money to live out your days, and you’re suddenly worried that you won’t? It’s too late? Nope! However, the sooner you begin the financial planning process, the sooner you will get your finances and emotional discomfort under control. And even if the results of the planning test confirm that you have reason to worry, take comfort in the fact that you now have the information you need to make thoughtful changes to your spending and savings and to consolidate your resources in the future. long term. You can expect some short-term financial challenges as you temporarily tighten your spending habits, but over time you’ll see what a difference even small changes can make to both your emotional and financial well-being within months. and the years to come. So be brave and do this financial planning work as soon as possible!

Financial markets will always be in motion and how you react to them will need to be controlled. If you think investing in these markets will help you grow your nest egg, then you have to accept it. And you’ll find it’s much easier to accept that if you’ve taken the time to do what you can to control what you can: spend AND save.

When you have faced your fears and understood the realities of your financial situation, you can remind yourself that you will, in fact, be OK in the long run. Find a financial advisor you can trust who will take the time to get to know you and understand your concerns. Make sure you have a well-diversified portfolio to help weather the ups and downs of volatile financial markets. And absolutely have a thoughtful financial plan to back up your investment journey that will support your emotional well-being.

Hightower Advisors, LLC is an SEC-registered investment adviser. Securities are offered by Hightower Securities, LLC, Member FINA/SIPC.