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Minding Your Money
When the Dow plummeted earlier in the week, many investors got more than a sinking feeling—they panicked. It's natural, says First30Days expert Brent Kessel, co-founder of Abacus Wealth Partners."When experiencing financial distress, our natural inclination is to want to do something. With investing, this usually backfires," he says.
We asked Kessel what you can do today to feel better about your financial position when there seems to be nothing but bad news around every corner. Here are three things he recommends to help cope with these turbulent times:
1. Consider decreasing your discretionary spending in the short run. Then re-evaluate the need to reduce longer-term spending in January. While the dollars may not seem like a lot, shifting the momentum from "Yes" to "Not right now" has a tremendous psychological effect, and over time, a very positive financial impact as well.
2. Refinance your mortgage. Do this if you have less than two years to go in your fixed rate period (assuming you plan to stay in the home long-term), or if your rate is above today's rates. Call or email your advisor for a good mortgage broker recommendation if you don't have one.
3. If you have more than $100,000 in any one bank, wire the excess into your wealth management account so that it can be invested. As famed investor Sir John Templeton said, "To buy when others are despondently selling and to sell when others are avidly buying takes the greatest fortitude and pays the greatest reward." Now is such a time. Even if you'd prefer to have your extra cash in money markets, they will be more secure at TDAmeritrade than in a non FDIC-insured account at your bank.
In summary, says Kessel, this too shall pass. He and his associates believe that owning a diversified global mix of equities, along with a healthy dose of real estate, bonds and commodities, is the best way to ensure your financial freedom in the future. In plain english? Mix it up—don't keep all your eggs in one basket! For more great advice from Kessel, listen to his Change Nation podcast interview.