Real Risk

Over the last 3 days the stock market has been more volatile than it has been over the last 3 years.

Risk has returned….Image result for volatility picture

However, in financial planning risk never left.  But we view risk very differently.  To us, not committing to saving enough money to accomplish your goals and objectives is the biggest risk you can take.   And that has nothing to do with Apple Stock, Bitcoin, or a Vanguard mutual fund.

Saving $50/month instead of $200/month because you are unwilling to change your lifestyle is the real gamble.  The risk/reward is with your future! That should be something you are more concerned about than the value of your portfolio every day.  Being fearful of your portfolio dropping by 1%, 5% or even 30% pales in comparison to the fear you should have of not saving enough money.

Forget your account balance; think about your future in real dollars…

What if ….?

  • You find your dream house – but don’t have the down payment
  • You’re ready to stop working – but don’t have enough money to replace your income
  • The roof springs a leak –but  you don’t have enough money to fix it without going into debt

None of these problems are stock market related.   These problems are about your real life.    To solve these problems (these real problems) you have to commit to saving more money.

  • How big is your rainy day fund?
    • It needs to cover at least 3 months of your monthly expenses.
  • Are you contributing to your 401k plan at work?
    • Your goal should be to max it out.
  • Do you have larger goals?
    • Where are you saving money for these?

The good thing about these real problems is that you have control over their outcome.  You can chose to save more or not. However, the stock market you have no control over.

Focus more on your saving and less on your portfolio balance.

Have a good day and don’t check your balance tomorrow!



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