Drown out the noise

How much news have you consumed these past few months? Think about those daily coronavirus briefings, the morning, lunchtime and night time updates. Then there’s social media which updates you by the minute on world events. The stock market has been pushed to the front pages ‘Stock markets in freefall’, ‘a flight to safety’, ‘investors rush to gold’, ‘world stock markets crash, plunge, bomb, drop, plummet, freefall, belly flop!’

How can any sane person read that and not feel a sheer sense of dread and start to allow their emotions to take over and dictate their decision making? In times of high stress, we actually forget about our future self and focus on our present self. This is when we are likely to make potentially disastrous financial decisions.

That’s why today’s money manta is focused on imparting steely wisdom on you – drown out the noise that comes from the mass media. They are there to entertain, sell news, clicks and advertising space. They are not there, generally speaking, to educate you and give you specific financial advice. In fact, most are not even qualified to do so. And that goes for your friends and family too – they’ve likely been reading and watching the same content as you, if not more of it.

All this noise from various sources can potentially lead you down very destructive financial paths - selling when prices are falling, buying when prices are high, panicking and rushing to cash, [insert other poor investor behaviour here]. However, if you take a step back from it all, you’ll begin to understand that volatility (which applies when markets go up, as well as down) is perfectly normal in the stock markets and apart of the journey. Markets do fluctuate over time and over the long term that trend is positive (with history as our best guide).

However, there are no guarantees in this game and you do need to be prepared to pop your rain jacket on and weather the storms when they come. And they will come, but do so with the knowledge and understanding that the great advance will continue, one way or another. This storm will pass, just as many have before it (Great Financial Crash, DotCom Bubble, etc.)

So be aware of the noise around you, but don’t let it drive your decision making. It’s your goals that drive those decisions and by following a consistent, disciplined approach, regardless of whatever today’s big event is, you’ll keep working towards your positive financial future.

For all your investing queries, get in touch at team@spentwell.co.uk and we’ll help you get on track with your finances.

Keith

Managing Director

Spentwell.

Guidance only. Investing in the stock market does carry a degree of risk and returns are not guaranteed. Be aware and understand the risks involved before participating. If in doubt, please seek professional advice.