For many investors, the last few years have been filled with ups and downs in their portfolios, and uncertainty as to what to do with their money.  But most of the answers are the same as they have always been -- common sense principles which guide most successful investors, be they wealthy and sophisticated or just getting started.  Here are some basic ideas that are worth remembering as you read recent headlines and investment account statements.

First and foremost, I believe you need to have a "plan" -- a roadmap as to where you want to go. As one financial advisor used to say, at the end of every one of his radio shows on financial security -- "If you do not know where you are going, any road will do."  What he meant was that if you have no financial or investment plan, then you have no basis for a decision as to how to proceed when inflation, war, recession or new exciting investment options like Bitcoin appear.

A financial plan can be very simple or very complex, but the common theme is understanding who you are, what financial and life goals are important to you, and thus what types of investments and spending habits will help you reach your goal.  You can work with a professional financial advisor on this, or work through it yourself, potentially with the help of books or online information. For most people what comes out of that exercise is that they want to accumulate a certain amount of money so they can live well and retire comfortably. However, the speed at which they want to get "there" and the dollar amount they think they will need will vary greatly. Once the goal is established some number crunching will tell you what amount you have to save each year, and how much risk you may need to take to achieve your goals. 

In general, once the investment plan is created, the main issue is sticking with the plan in times of uncertainty, like today. While it is easy to say "buy low and sell high," human nature often has us doing the opposite, because when the market is down 20-25%, like it has been recently, there are real, sometimes scary reasons for it. And if it goes down another 20% from here it will seem like an even scarier time to invest because something bad is happening. So, most investors not only do not buy low and sell high, but they also sell low and buy high. The principle of "buying straw hats in winter" is often forgotten when winter is here. As legendary investor Warren Buffett says ""Be fearful when others are greedy and greedy when others are fearful". Using this principle, if your investments are underweighted in the stock market, then it may be time for you to invest some in the market, while it is somewhat low, and even more so if it goes lower. However, if you already have a good amount in the market, buying more may not be recommended. It all goes back to your goals and your plan. 

Two popular investment themes in recent years have been FOMO (fear of missing out) and TINA (there is no alternative). Both of these slogans made people money for a while, until they cost most people even more money. FOMO happens when " everyone" seems to be making tons of money in Cryptocurrencies, or the stock market, and we do not want to be left out, so we get into riskier assets often just before the end of the "bull market". TINA happened recently when interest rates were close to zero, so safe bonds, and bank accounts appeared to be poor choices, so everyone went into higher risk assets like the stock market, just before all those riskier assets dropped 20-80%.

What should most people do right now? Most people do not have the interest, time, or expertise to be active traders and speculators, even though they may like to dabble at times. I have been in the investment business for 42 years, yet I do not trade individual stocks, or crypto, or gold, or real estate. If I want to invest in one of these areas, I hire people or companies who do nothing but this. Why? No matter how much research any one investor does, they are competing against professionals and companies who have done 100 times more research about whatever investment they are considering. And even those experts do not always "win". Most people do best with a "boring,” "all weather," balanced portfolio that fits their financial profile and is designed to achieve their financial goals. For those who are comfortable with more risk, or like a particular investment, like real estate for example, they can have a plan that includes more of certain assets. Some people like to set aside what might be called "play money.” They might have 90% of their money in their appropriately diversified portfolio, but they have 10% they can play with investing in things like crypto, or certain stocks that they like and follow. Long term, most people lose money with their "play money,” or make less money than in their core portfolio but some will discover they have a talent for investing. Before you decide to take more risk with a portion of the money, remember this saying: "Don't risk money you cannot afford to lose to make money you do not really need". While it can be fun to "play the market," buying hot stocks or crypto, these are high risk strategies, no matter what you may think at the time.  Also remember that you may have great success trading for a few months or years, but when the market turns you may lose it all. As Warren Buffett also likes to say, "only when the tide goes out do you discover who has been swimming naked". Recently, many investors in high-risk assets have discovered they were swimming naked!

Investing for me is about allowing us to fulfill our dreams and have a great life. Follow these simple guidelines and a great life could be your outcome.

A note from Dr. Charlie:

Eric Schwartz has been involved with business and investment for over 40 years. He speaks with authority when he says, “I can tell you exactly what the market is going to do. It’s going to do one of two things. It’s going to go up and then down. Or its going to go down and then up.”

But in all seriousness, our financial health plays a pivotal role in our general health since it contributes greatly to our overall sense of wellbeing. It’s not just about working harder to get ahead, but instead creating a plan that is sustainable over time, hoping to minimize stress and increase one’s time, either now or later in life, to be able to spend it how they find joy and connection.