5 Tips for your Money and Mindset in 2021
1. Don’t fixate on the news
We believe markets are efficient. What that means is that the price of stocks has already accounted for all publicly available information. Oftentimes, the market is forward-looking, so the price you see today is baking in what the market thinks may happen in the future. All that by way of saying, for a long term investor, there is seldom little advantage to be gained by timing the markets. It’s important to choose a strategy and stick with it. Don’t become a day-trader!
Are you on the right financial path? Contact Prism Planning Partners today for a consultation!
If the news makes you nervous, however, this could be a sign that you may want to hire a financial professional. One of our main jobs is to act as a behavior coach. Many clients simply want someone to “bounce ideas off of” and look to gain an alternate perspective about news events and/or changes in investment strategy.
2. Write down your goals
You wouldn’t leave for a road trip without a map (or your cellphone’s maps app). The same holds true for your savings and investments. What’s the end game? Maybe you want to make sure you can afford to pay for your child’s college education. Maybe you want to change careers in mid-life. Maybe you want to buy a vacation home, travel to Europe every summer, or retire 5 years sooner than typical.
The point is, whatever the goal may be, it’s important to share your thoughts with your spouse and write it down. This helps you stay motivated when times get tough – or when temptation might give in.
3. Re-Evaluate your Living Situation
We’ve all had cabin fever in the past year due to COVID. With a recent housing surge, it’s apparent that many are motivated to change their living situation. And for some people, this could be great! For those contemplating a downsize, it could make sense to take action on that now. But before you buy or sell a home, we really urge you to deeply consider why you want to make a move. A bad reason to move is that you’re bored, feel like you’re at home too much, or because your friend just got a beautiful new home. A house is a place to live for the long term and a very costly (but necessary) proposition. Really think about your lives post-pandemic before making a move.
4. Change your Mindset
The theme of 2020 was “make it through”. 2021 is set to offer a fresh new perspective, and hopefully the start of a post-pandemic world. Life is not going to fully return to what it was pre-COVID; there will definitely be lasting societal changes due to this pandemic. BUT, at some point in 2021, it will be appropriate to begin thinking about life “on the other side.” Yes, lockdowns will ease, but we’re not going to return completely to the carefree times of pre-2020.
While yes, you may be able to go out more, people will still keep their distance, wear masks, and hand wash regularly. Quarantine measures may still remain in effect if you’re exposed. It’s likely that rapid tests will be more available and used quite regularly before gatherings. While there’s optimism that society will be able to do more, we are probably not going to fully return to the hustle and bustle in 2021
5. Stop Flight or Fight Mode
Back in early to mid-2020, everyone was so worried that the economy was going to crash, stores would run out of essentials, and political instability was tremendous. We’ve seen a lot of worry, but it looks as though a recovery on all those fronts is beginning. Clearly, we know that you don’t need to hoard toilet paper anymore, and the timing of recovery on the economic and political fronts remains unknown – but it’s starting to happen, albeit slowly. This goes back to our mantra of focusing on the long term. We’ve made it through, and now is the time to refocus on taking small steps towards achieving your long term goals, and not panicking!
At Prism Planning Partners, we are CERTIFIED FINANCIAL PLANNER ™️ Professionals committed to facilitating important questions so that we can help you explore all of your opportunities. We offer a broad array of financial planning and consulting services for our clients-including retirement, investment, and estate planning.
Contact us today and let us illuminate your possibilities!
Download our free eBook today!