The 5 Worst Investment Mistakes You Can Make Right Now!

The U.S. stock markets have experienced renewed volatility following Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on August 26th. He reiterated the Fed’s aggressive stance on inflation and said further interest rate hikes could lead to slow economic growth and rising joblessness. (1) With the Nasdaq down nearly 7% and the S&P down 5%, many people are understandably nervous. (2)

If you’re like many of our clients, you may be a successful attorney or owner of a law firm looking forward to retirement in a handful of years. You may be wondering how you’ll manage if this volatility continues and Powell’s predictions come to pass. Well, I’m here to tell you that all hope is not lost—as long as you keep your head on straight and avoid these 5 investment mistakes.

1. Panic Selling

With so much volatility in the air, it’s easy to let our emotions get the best of us and make knee-jerk reactions. But selling into a falling market will actually lock in your losses and put you at risk of missing out on the inevitable market rebound. Remember, your investments may lose market value, but you don’t lose any money unless you sell while the value is low.?

As difficult as it is to see your investment values drop, especially when retirement is right around the corner, try your best to stay calm and keep the big picture in mind. Fluctuations in the market, and even recessions, are perfectly normal.?

This is not the first time the market has taken a tumble, and it won’t be the last. Declines in the Dow Jones Industrial Average are actually fairly regular events. In fact, drops of 10% or more happen about once a year, and 5% drops happen about 3 times a year on average. (3) Panicking over something so common is surely a waste of time and energy.

2. Making Dramatic Changes to Your Strategy

Just as you shouldn’t panic sell, you also shouldn’t make dramatic changes to your investment strategy in reaction to market volatility. It might be tempting to think that your strategy isn’t working and you need to do something else. But beware of making dramatic changes after large moves in the market.

Since the market has historically always rebounded from a drop, investment strategies tend to “revert to the mean.” This means that something that is not working this year may work very well next year when the market rebounds. Constantly changing your strategy during difficult periods puts you at risk of missing out on rewarding periods.?

Click here to read the rest!

About Darren

Darren Wurz is a fee-based financial advisor and co-owner of Wurz Financial Services, where he operates the Northern Kentucky/Cincinnati office. He is a CERTIFIED FINANCIAL PLANNER? and has a master’s degree in financial planning from Golden Gate University. Darren specializes in serving the unique financial planning needs of attorneys and law firm owners. He is the host of The Lawyer Millionaire Podcast and author of The Lawyer Millionaire: The Complete Guide for Attorneys on Maximizing Wealth, Minimizing Taxes, and Retiring with Confidence, published by the American Bar Association.

Darren is a member of the American Bar Association and the Financial Planning Association. He is also active in his local community as a member of the Northern Kentucky Bar Association, Cincinnati Bar Association, Covington Business Council, and Northern Kentucky Chamber of Commerce. To learn more about Darren, connect with him on LinkedIn.