I’ve often said that “staying the course” is the best thing you can do for your finances. And for most people and most situations, that is true.
But I also subscribe to the idea that you need to sleep at night and sometimes it makes sense to do what’s not financially optimal but emotionally optimal.
This post by Callie Cox does a good of explaining how to do this intelligently and react to the market without trying to time it per se.
The investing advice you actually need [OptimistiCallie] – “I’ve had countless conversations with our 30-odd advisors over the past 10 months about how to best guide clients through market drops and recessions. Everybody has their own style, but more often than not, I hear my colleagues discuss short-term portfolio changes when prices start swinging. The opposite of what you’d hear from the “stay invested” crowd.
I’m not talking about major, sweeping decisions. Instead, think thoughtful, precise actions at the margins of the portfolio to help their clients stay the course. Actions like pulling forward a scheduled investment if a selloff reaches a certain level. Raising cash at certain price levels before the storm hits. Converting an IRA to a Roth under certain circumstances – like a drop, plus enough runway in the investment plan to make up for the tax bill.”