Think back to four years ago, when media outlets and economic pundits were doing their best Henny Penny impersonations.
The economic sky was falling. Whether Barack Obama or Mitt Romney was to be elected president, the United States would be unable to pay its bills. The stock market would drop to perilous levels, perhaps as much as 30%.
That level of drama went on for months.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Now here we are four years later, and the drama is on par with where it was then, but this time, we started hearing it even earlier.
My advice: Don't buy into it. In fact, I want to focus on taking the drama down a notch.
Back in 2012, if we all had a dollar for every time we heard the term "fiscal cliff," we'd each have an additional $10,000 in our savings accounts. It was brought up every day on every channel. Before then, the term had never been used.
For those who don't remember, at the time, President Obama and Congress needed to reach a deal on $500 billion in tax increases and across-the-board spending cuts. Federal Reserve Chairman Ben Bernanke coined the term "fiscal cliff" to warn of the dangerous drop-off the nation faced if no action was taken.
We worried about whether, as a country, we would be able to pay our bills. On a scale of one to 10, our drama level reached a 12.
No one in the media ever discussed, to any great degree, a scenario that would pave the way for the positive year the market actually experienced in 2013.
Remember that as we continue through this election cycle. No matter how dire the situation may seem, no one has a crystal ball to truly predict how the market may or may not perform. You're better off disregarding all the gloom and doom and focusing on your own financial situation.
In any year, regardless of whether there is an election, the key thing is to develop a financial strategy that allows for the ebbs and flows that occur in the market at any given time.
Whether you use a professional or do it yourself, create a financial plan that allows for some clarity on how much money you are really willing to lose and how much money you are potentially willing to lose, even if it's just paper losses. The last thing you want to do is create an investment plan with too much risk, causing you to hit your "uncle point" and potentially make decisions that could have a severe impact on your long-term plan.
If you do work with a financial professional, be sure that person communicates with you effectively during stressful and uncertain times so you're not making rash and drama-filled decisions.
Isaac Wright, president of Financial Dynamics & Associates, is a financial advisor and licensed insurance professional who has helped retirees for more than 15 years. He also is author of Navigate Your Way to a Secure Retirement.
Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.
Yvette Hammett contributed to this article.
-
Gray Divorce Can Throw Your Retirement a Curveball: What to KnowIf you're entering retirement and going through a divorce at the same time, you've got some work to do to shore up your long-term financial security.
-
I'm a Real Estate Investing Expert: Optional 721 UPREIT DSTs Can Be the Best of Both WorldsBefore investing in any 721 UPREIT exchange, look for one that offers a straightforward, investor-friendly exit.
-
Gray Divorce Can Throw Your Retirement a Curveball: What to Know
If you're entering retirement and going through a divorce at the same time, you've got some work to do to shore up your long-term financial security.
-
I'm a Real Estate Investing Expert: Optional 721 UPREIT DSTs Can Be the Best of Both Worlds
Before investing in any 721 UPREIT exchange, look for one that offers a straightforward, investor-friendly exit.
-
How an Expired Passport Thwarted Blackmail (and What Other Important Documents You Should Keep)An optometrist produced his expired passport to foil a blackmail attempt by the daughter of a former employee. After proving he was out of the country on the date of a forged diary entry, he took it a step further.
-
Optimize, Grow, Retain: The Power of Annual Client ReviewsFinancial advisers can use annual reviews to help enhance client outcomes, strengthen relationships and build their practice.
-
I'm a Real Estate Investing Pro: This Is What Investors Should Know About Truck Stop InvestmentsTruck stops might seem like good investments, but they can actually be a risky gamble due to unstable fuel prices, unreliable operators and coming changes in transportation. Instead, consider safer options like industrial or residential properties.
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams NowBeyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
