2 Vital Tips For Effectively Managing Your Wealth
Smart investors set specific goals to better manage their wealth. Whether you’re in the market short term or long term setting goals adds order to your mind and helps you remain mentally disciplined during volatile markets.
Most people never tap into the true power of the stock market because they have little mental discipline. You will feel greedy, fearful and eternally hopeful during market highs or lows yet you can’t act on these emotions or you’ll likely lose a significant amount of money.
Practice observing your emotions around money to avoid acting on these momentary urges. Successful wealth managers practice emotional discipline to achieve the greatest returns.
Have a Long Term Vision
Too many investors get shaken out of the market during short term corrections. Develop a long term vision of where you want to be financially in the future. Whether you’re nearing retirement age or have 40 years until you hang them up be aware of your goals and dreams.
Savvy developers set up short and long term goals to stay the course. Managing your wealth requires patience and discipline to avoid bailing out on the market during downturns. At times you may lose an appreciable amount of your nest egg but if you’re 20 or 30 years away from retiring you’ll have more than enough time to recover from the unfortunate correction.
Remember that a combination of fear, hope and greed rule the financial marketers. If you can ride out low periods or resist the urge to cash out after a run up you’ll have a sizeable next egg to dip in to during your golden years.
Be Mentally Disciplined
Whether you’re a short term or long term investor you’ll need to be mentally disciplined to manage your wealth. Growing your assets during big market spikes and cavernous market downturns may seem like an impossible task to the undisciplined person who acts rashly on their emotions.
Greed, fear and hope rulethe stock market. Immunize yourself from acting on these fears by studying the investment greats. Jesse Livermore – one of the greatest investors of all time – constantly harped on the mental aspect of trading. He suggested being mentally disciplined when the market saw a huge spike or when you were feeling particularly greedy, hopeful or fearful regarding your investments.
When the market turns in a greedy direction you want to be fearful of the huge turn and consider cashing out on some of your short term investments. A massive topping, then crash, is bound to occur. When investors largely seem fearful about the bottom dropping out even more during a bear market you may consider investing more aggressively in growth stocks. When everybody seems hopeful about a strong, sharp rise in the market, and this giddiness catches like wildfire, be cautious about making any new short term investments.
Hold your long term investments during market spikes and strong corrections but be on the other side of the prevailing market “wisdom” during these times to achieve the greatest returns.
Contact Aaron DelSignore for all of your wealth management needs.