Solutions 4 Financial Independence: 11/13/18
Question Part 1: Today's question comes from Chip from Fairmont. “The market continues to scare me, I am thinking about getting out. Should I get out now?”
John Halterman: Well, Chip, no doubt man, it has been a horrible month, let’s not deny that, the market has fallen more this month than it has in a long time, but the one thing I always tell people is don't react to your emotions. One thing you always have to be thinking is “what are my goals? What are my time horizons? And what are my risk tolerances?” because think about this Chip, because if this is my retirement account, and I don't know your age, but if you got 20 or 30 years down the road, what you got to ask yourself is “what's going to give you the greatest opportunity to make money?” Now, understand this, it doesn't mean that sometimes you should be out of the market, because there is an appropriate time, but you should be out because of market data vs. your emotions, and if for some reason Chip, you have market data that tells you, you think the market is going to crumble, than absolutely you should consider getting out, but if you’re just doing it over emotions, I think that would be a little bit premature at this point.
Question Part 2: So, if he does decide to get out, where should he go?
John Halterman: Well, and that's the issue, because if you were to get out Chip, you know, where would you go? Would you go to a fixed account? And the reason why I ask that is, because sometimes we will go onto the sidelines and we will sit there because we believe the markets are in turmoil and we believe there is a recession, but if that’s not the case, and you were to get out, and you went to a fixed account, and then all of a sudden, the market rebounds, then unfortunately you would miss that rebound, and that is something that has actually happened in the last couple of days. So, those who acted a little premature, unfortunately did not end the month as good, those who didn't, definitely got just a little bit of rebound at the end. So, Chip, think about your goals, think about your time horizons, and think about what you’re trying to do because you react.