Fear isn’t advice
How to stay the course when emotions run high.
Lately, I’ve been hearing a lot of financial voices talk about bracing for economic chaos, fearing the impact of new policies under Trump’s presidency. I’ve read social media posts and blogs calling for investors to pull your money from the market, stash as much cash as you can, and to keep separate bank accounts from your partners to hedge against the bleakest of possible policies. Please know, I’m not here to discount your fears. If your concerns feel real to you, then they are real.
Fear is a natural response to uncertainty. But making drastic changes to your financial life based purely on fear could end up causing more harm than good to both of you.
In times of distress, we crave security, and our brains rush to protect ourselves. It’s not hard let your emotions flood out the facts, but the long-term implications of doing so might be worse than the immediate comfort you’re seeking.
Let’s say, you’re feeling a gut-level dread that the stock market is going to crash. You sell your investments, move everything to cash, and breathe a sigh of relief. You’ve avoided the pain of potential losses, right?
Not right. Markets fluctuate, but history has proven to investors that the stock market goes up over time. By pulling out, you might miss a rally or the rebound that compensates for the downturns you’ll inevitably experience. Make this your mantra: “Time in the market beats timing the market.” The last eight years show you why making investment decisions based on who is in office is a bad idea.
I think it’s better to evaluate whether you’re motivated out of feeling or factual concern.
A sheer feeling would be a vague sense of doom, like thinking, “The economy is going to collapse, and I need to do something—anything!” This is an emotional reaction, and it’s generally not based on specific information. Whereas, a well-founded, factual concern is steeped in something more tangible. For instance, if there’s credible talk of eliminating student loan forgiveness plans, that could have a tangible impact on your finances if you have student loan debt. Or if you’re pregnant, pursuing the fertility process, or are storing embryos in a state where reproductive health policies could jeopardize your family or your plans, your concerns are not only tangible but mitigating them costs money that you might be able to account for. Being able to identify when your fear is rooted in tangible, impending facts versus when your anxiety just runs wild is key to making the most reasonable financial choices.
By the way - and maybe this is a sidebar - I’ve seen people suggest you just move if certain policies don’t align with your values. Obviously, it’s not that as simple of a solution. Moving is costly and disruptive. Think about our web of connections and resources: family, friends, jobs, schools, and local communities. Besides, you can't fully outrun national policies or the ripple effects of federal decisions. Moving might be the right conclusion for some, but it’s far from how easy the flippant reply-guys make it seem. Way more often, you need to prepare to weather storms instead of escape them.
Then, of course, you need to talk with your spouse. Share what’s keeping you up at night. Maybe you're worried that your life savings could vanish if the markets drop or that you won’t be able to access essential healthcare services. Your concerns are all valid and deserve discussion, but they don’t all need to be acted on ASAP. Instead, you might discover that just communicating and taking small actions (like adjusting your investment allocation slightly or making sure you have an ample emergency fund) can give you and your partner a sense of control without giving into your fears and derailing your long-term goals.
So, what can you do to ease your fears without jumping to the extremes?
Reevaluate your cash reserve – First, make sure you have enough reserves to begin with. My general advice is to carry six-to-nine months of your living expenses in cash, but you can consider increasing this amount by another three-to-six months if your anxiety is getting the best of you. It’s okay to adjust things based on how you feel, but going all in on cash isn’t it.
Reassess your risk tolerance – If you think the politics are going to negatively impact the economy and financial markets in the short term, think about adjusting the amount of risk you’re taking. Taking a measured approach is better than making large sweeping changes that, if they wind up being wrong, can have significant financial consequences.
Stay informed but set boundaries - It’s important to be aware of policy changes that could impact your life, but doomscrolling isn’t helpful. Consider putting hard lines in place for your media diet, and limit who you consume news from and how often you consume it.
Get involved locally - If there’s a policy that feels threatening or has the potential to impact your life, think about contributing to local advocacy groups to feel less helpless. Even small acts of engagement are very empowering, and you can see the impact right before your eyes.
At the end of the day, fear is a powerful emotion. It can motivate us to take action, but not all of those actions are productive. Before making far-reaching changes, pause. Talk to your partner, revisit your financial goals, and consider if there’s a balanced approach that addresses your concerns without compromising your future.
Your financial plan should be resilient, built to withstand all types of volatility, but it should never be reactionary. Adjustments are normal, and sometimes necessary, but don’t let fear drive your financial ship. Thoughtful, well-communicated plans almost always beat rash decisions. And remember, you’re not in this alone. Talk, strategize, and move forward together.
I think I’ve caught the family travel bug, because I’m still having daydreams from our adventures at Universal Studios, Florida. It’s funny that just a few short years ago, traveling with our kids was a totally different experience than it is now. These kids can hang, which means the types of things we can do and places we can go together are evolving. I love this part of parenthood, and we’re already planning our next big trip together.
TJA in the News
Heather and I joined our friend and fellow financial advisor Brendan Frazier on his podcast, “The Human Side of Money,” to talk about what advisors need to know when working with couples and money. We also shared some personal stories from our own relationship. It was a good one!
I spoke with CBS News about how a home equity line of credit (HELOC) can save you money.
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The content shared in The Joint Account does not constitute financial, legal, or any other professional advice. Readers should consult with their respective professionals for specific advice tailored to their situation.
I am sure many of your readers are in their 30s trying to figure it out. I am 65 and have some wear and tear on me.
If you are scared, have a really good meal first and take a nap afterwards. This is a body reset. The nap a mind reset.
If you want to prep, tp, soup in a can, water in bottles, baby wipes. If you can have a back up of items you use a lot, that helps a lot.
Get a financial advisor. No matter where you are in life.
The media, and current government is all about creating crisis after crisis. Limit media exposure.
If you feel safe enough but want things to trade think, tp, liquor, shampoo, baby wipes. Have a medical kit, chocolate and good books.
We have gone through these kind of situations before, you were young and didn’t notice. Near bank collapses, raging inflation, interesting times. You are still here and so am I. You will see Creative ways to get along, and find out just who you are and what matters most to you.
Chachamim 🙌🏼