So the financial markets have had a turbulent few months and this week looks to be no different. And in case you have been on the planet Mars or completely disconnected from the financial news lately, you realize this week’s volatility dealt with the Federal Reserve’s decision on interest rates. There was much anticipation and what appeared to be nonstop coverage of the ‘big day’. The financial media paraded so-called expert after expert on air, or online, to weigh in or whether they would or wouldn’t raise rates. At the end of the day, the Fed decided to raise rates for now.
The bigger question is “Should I Care..?” For most investors the answer is No. Successful investors and long-term savers are best served through a thoughtful, disciplined approach to their planning. A financial plan and well allocated portfolio help investors stay focused on their long-term goals and avoid emotional reactions to turbulent short-term markets. How can I be sure? Simply look back at the last few years for examples of newsworthy headlines, that moved the market in the short term. Remember the Fiscal Cliff? Or when Standard and Poor’s downgraded US Treasuries? Or the 2012 Presidential Elections? How about the Greek Debt Crisis, both times? All of these issues moved the markets in the short term, and caused many folks undue angst about what changes they should make in response to the crisis du jour. Today, these events barely register as consequential for investors and many folks have forgotten the events completely. I presume the volatility of the past few months will quickly fall into the same category.
“Should I be Aware?” Of course. Burying one’s head in the sand to avoid all things financial is never advisable. But reacting to short-term market fluctuations and financial headlines never serves one well and often derails a well-thought-out and executed financial plan.
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