Fight or flight?

As physicians, you’ve likely been grappling with this response for months, and it illuminates the powerful role emotions play in finances. While emotions play a positive role in curating your values, goals, and aspirations, they can also lead you to make choices that don’t align with your plan, especially when done out of fear. 

Fear is a common, yet highly complex emotion, and when applied to financial choices, can cause frustration, anxiety, and stress. How can you learn to acknowledge, process, and move beyond fear in a way that won’t hurt your finances? Let’s find out.

What leads to a fear-based choice?

As you know, fear response emanates from the amygdala, making it essential to pinpoint the source of the fear to best figure out how to address it. 

Fear, like other emotions, doesn’t happen in isolation. It is a response to external or internal forces or actions that inspire the feeling. There are many aspects of personal finance that can cause fear:

• Market downturn or crash (or threat of one)
• General unknown of future needs/wants
• Personal hardship
• News or media circulation
• Social/personal pressure

We aren’t naming these things to scare you, rather we want to help you identify the aspects of your financial plan that concern you. Acknowledging the parts of your plan that are causing negative emotions will help you make adjustments to improve it. Ask yourself,

• Are there areas of your strategy that scare you? 
• What are they? 

Let’s take that a step further to get underneath those feelings of fear or stress. 

• Where are your feelings coming from? 
• What force/action has inspired that emotion? 
• Is that source based on fact or fiction? 

Sometimes it is easy to let news stories or popular opinions or even your own biases get in the way of your financial plan. By confronting your questions, assumptions, and fears you will be better able to decide what, if any, action needs to be taken. 

How to recognize and remove financial pressure.

Doctors have had a front-row seat to the havoc the coronavirus has wreaked on the mind and body. This first-hand experience casts a distinct light on the situation and influenced behavior differently than those in other professions.

Should you pull your assets out of the market? A Case Study 

Seeing the negative impacts of COVID-19 day in and day out led one surgeon to pull a significant amount of assets out of the market, convinced that the virus would only spread and the markets drop even further. 

In reality, the market quickly priced in the pandemic. Quick action on government stimulus coupled with promising news of a vaccine resulted in a quicker rebound than even many market experts predicted. The surgeon who cashed out in the spring simply traded one anxiety for another: the anxiety of losing money for the anxiety of missing out on gains. 

This example exposes the pressure physicians put on themselves to secure and sustain their financial wellbeing. How can you mitigate some of that stress?

3 tips to make the market less scary.

The market isn’t a fear-free zone. People worry about: 

• Losing money
• Missing out on an opportunity
• Making the wrong call
• Watching profits turn into losses
• Uncertainty over when and how to reenter the market

A great strategy to consider is dollar-cost averaging. Instead of selecting a date to make a significant lump sum, you can invest structured smaller amounts more regularly. This eliminates the idea of timing the market and alleviates some pressure and responsibility to do so. 

With investing, it’s important to keep your eye on the prize. Your investment plan was built for the long-haul, at least 15 + years. Should you have funds invested you need in the next couple of years, it may be prudent to use a safe money market type vehicle. But if you don’t have those short-term financial needs, you’re in a good position to stay the course.

There will be ups and downs, but ultimately investing is about your asset allocation strategy blended with your comfort level. Your needs are the most important, so be sure to honestly evaluate your risk tolerance no matter where you fall on the scale. If you are staying true to yourself, then you won’t be making a choice based on fear, rather one based on fact, knowledge, goals, values, and hopes for the future.

Lean on your goals.

Whenever stress sets in, you might feel anxious about the next steps to take. Our advice? Take another look at your financial goals. Your goals are the benchmark for your financial plan. They help establish your spending, saving, and investment strategy. 

Ask yourself,

• What are you working toward? 
• Will your proposed course of action help or hinder your progress?
• Does the state of the markets alter your short-term or long-term financial goals?

Talk it out with your financial team.

Before you talk yourself into fear, call your advisor. You’ll be able to find so much more peace of mind even after a short call with your advisor. 

Your advisor knows you and your goals and will be able to be the sounding board you need to answer your questions, review your plan, and make any intentional updates. Sometimes you just need an objective professional to help guide you through moments when the future is a bit fuzzy.

Our team would love to help you navigate the road ahead. If you’re ready to learn more about how Vestia can serve you, set up a time to talk with us today.

Investment advisory services offered through Vestia Personal Wealth Advisors, Vestia Retirement Plan Consultants, and Vestia Advisors, LLC. Securities offered through Ausdal Financial Partners, Inc., 5187 Utica Ridge Rd, Davenport, IA. 52807 (563)326-2064. Member FINRA/SIPC. Vestia Personal Wealth Advisors, Vestia Retirement Plan Consultants, Vestia Advisors, LLC, and Ausdal Financial Partners, Inc. are independently owned and operated.

This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.  This information is not an offer or a solicitation to buy or sell securities.  The information contained may have been compiled from third-party sources and is believed to be reliable.