What’s Holding You Back From Financial Freedom?
Vol 3: Excessive Worry
Part 3 in Vicki Arndt’s series exploring the relationship between wealth and beliefs.
I’m worried about us.
Specifically, I’m worried about how much we’re worrying and how that is affecting our long term health – and our financial health.
As a 25-year financial advisor, I’ve weathered numerous economic and political upheavals alongside my clients. The dot com bust, the 9/11 terrorist attacks, the housing bubble crash, the Great Recession, wars, natural disasters, and political unrest.
But I’ve never seen anything like what’s happening now, from the pandemic, to extreme political divisions, to the cascade of bad news and disasters that washed over us in the past year. The combination has left us feeling battered and with a feeling of malaise that doesn’t let up. The constant pressure of these stressors keeps us in a constant state of fear about what might happen next. But living with this level of stress is detrimental to our health, our relationships, and our decision-making.
I cannot begin to offer enough advice to erase these major influences on our individual and collective well-being. But for those willing to listen, I can offer a perspective on investing that might help you with some of your money-related fears.
Making Good Financial Decisions Should Not Be Scary
Investing and making good money decisions should not be scary. Taking control of your finances should be empowering and even fun. When you decide to take charge of your financial future, invest in businesses and funds that you’re interested in or passionate about – investing is truly fun. And when you see your investments grow over time and start reaching goals, it’s positively energizing!
But the messages that come at us from the financial world are anything but empowering, right? On one hand, there is so much financial advice available on the Internet, choosing what to read can itself be overwhelming. On the other hand, listening to market forecasters or pundits can get so detailed and complicated, you walk away feeling incapable of making an informed decision. This can lead you to just chuck the whole idea and do nothing. And doing nothing about your financial future won’t lead you to anywhere you want to be!
Fear of making the wrong decision can keep you from making any decision.
Vicki Arndt
It’s incredibly common to feel so afraid of making the wrong decision that we can end up not making any decision. An example of this is clients who come to me with multiple 401k accounts from previous employers – and none of the accounts has been managed since they left their former employer. Not paying attention to your investments is an opportunity lost, either in mitigating loss or enjoying more gain. The opportunity cost can be dramatic, but I can’t tell you how many clients I’ve advised over the years in this situation.
What is behind this inaction? The best answer I can offer is fear; or to be more specific, fear of making the wrong decision and potentially taking a loss.
Why Do Fear and Worry Cause Inaction?
Our bodies respond physically to fear. “Fear is our survival response,” according to Licensed Clinical Psychologist Dr. Zachary Sikora, of Northwestern Medicine in Chicago. In an article titled, “5 Things You Never Knew About Fear,” Northwestern Medicine describes the body-mind fear connection this way:
“Fear is experienced in your mind, but it triggers a strong physical reaction in your body. As soon as you recognize fear, your amygdala (small organ in the middle of your brain) goes to work. It alerts your nervous system, which sets your body’s fear response into motion. Stress hormones like cortisol and adrenaline are released. Your blood pressure and heart rate increase. You start breathing faster. Even your blood flow changes…
“As some parts of your brain are revving up, others are shutting down. When the amygdala senses fear, the cerebral cortex (area of the brain that harnesses reasoning and judgment) becomes impaired – so now it’s difficult to make good decisions or think clearly.”
So during stressful times, we actually get a foggy brain. No wonder so many of us feel like a deer in the headlights, as we worry about our jobs, about whether we or others we love will get sick, or whether the future can be better than what we’re living now. Worry is never our friend. And if our brains are foggy, we are less likely to make empowered decisions.
How Can We Make Good Money Decisions During Stressful Times?
What is the remedy for making better money decisions in the midst of fear and excessive worry? The first step is to take charge of the worry – signal your body to tell your mind that you are ok! Mindfulness, exercise, good sleep, healthy eating, and maintaining social connections can all help to restore our mental acuity and reduce fear. If you feel balanced and at ease in your body, the balance in your life cannot help but follow.
The second step with regard to your finances is to find a resource you trust and can rely on as a sounding board for your decisions. (That’s right – your decisions!) I manage money and investments for most of my clients, but I also offer hourly advice. I do this for the specific purpose of providing a resource to folks who want to manage their own finances but would like a qualified advisor to review their choices and offer suggestions. Clients tell me that my ability to affirm and guide their decision-making is invaluable to them. I don’t make commissions on investments – rather, I just charge an hourly fee. My whole purpose is to help you reach your goals and realize your life’s dreams.
Trust is Crucial to Reducing Fear
If you have a trusted support network, or your “village,” then you know you can weather whatever storms may come your way. One of my wise, long-time friends describes me as her “2 am phone call” kind of friend. We all need people like this in our lives. In addition to my close friends-and-family network, I view close professional advisors – which include doctors, accountants, attorneys, financial advisors, therapists, health trainers and coaches, spiritual advisors – as resources who help stabilize my fearful states. I have chosen professionals who I know and trust to be part of my village. They have my best interests at heart and they guide me with their expertise – which proves itself out in my life. If I don’t trust them, they’re not part of my village.
My investment philosophy, which has served me well for 25 years is to buy good things and hold them until they aren’t good anymore. This is more critical than ever, as COVID-19 has changed the way we do business, the types of funds we invest in, and even how we look at asset allocation. Money policy has also changed, such as the Federal Reserve keeping interest rates at zero. Government response to the pandemic is unprecedented, through the passing of two stimulus plans to put cash in people’s pockets and a boost for small businesses. What does all that debt mean for our future? Well, I don’t have a crystal ball, but I can say without hesitation that no matter what is happening, money is being made somewhere. That is where we want to be.
As a completely independent advisor, I have no affiliation with investment companies or funds. I learn your priorities and values, do the research, and together we make the best choices.
Find the Fun in Planning Your Future
Find your village. Get the support and help you need – it has never been more critical to build a network of valued advisors you trust. Focus on life balance and choose actions that work for you. Be kind to yourself and others. Turn off the news and resist “doom-scrolling” online. Have a few moments for a mental break? Take some time alone to clear your mind. Ask yourself, what would I love to think about for a few minutes? And find the fun in planning your future.
If we can step away from all the fear and focus on joy and fun, then I know I don’t need to worry about us. I am completely confident we will thrive and make progress toward our dreams.
Would you like to talk about how to find the fun in investing or planning for your future? I’d love to hear from you.
With you at every stage,
Vicki Arndt
Founder & Senior Investment Advisor