Author Topic: Strategies for staying calm in turbulence?  (Read 1182 times)

justostash

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Strategies for staying calm in turbulence?
« on: February 02, 2018, 08:59:26 AM »
I'm in the situation where my net worth is fluttering around my FI goal lately, was really hoping to FIRE this year.
Now of course things are tanking this week, so saying bye bye to the goal for now. I've been over-checking my numbers this past year and stressing all to much about it all, can't seem to stop.  I am not actively managing my savings, it's just in a robo investment account. I know all the cliches... 'stay the course', etc. But how about some tangible advice for someone who has the unhealthy addiction of checking their net worth several times a day!?  Thanks much Mustachians. 

Lady SA

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Re: Strategies for staying calm in turbulence?
« Reply #1 on: February 02, 2018, 10:17:16 AM »
I find I naturally check my net worth more often when the markets are doing well (like 3x a day lol), and when things are going less well, I check it less (like 1x per week). Having fewer bad reminders is good psychologically, and I'm doing less comparing because I can't remember where exactly my net worth was last time I checked -- so I'm not worrying "omg my assets went down exactly $14850 today!" or whatever.  Intentionally making my exact status fuzzy helps with the anxiety, for me, at least.

So my advice would be to really try to limit yourself/wean yourself from checking your balance so continuously. It's a cliche but try to distract yourself, don't watch the news to see how volatile the market was that day, etc. When you are "robo investing" as you put it, the less you know about exactly how the market is performing, the better :)

Also, just for some perspective, the market has only gone down to what it was valued 2 WEEKS ago. If it fluctuating that little is enough to give you anxiety, please consider taking a big step back. Were you panicking 2 weeks ago that you were losing money? No? Then why is having things at the same price even more than a tiny blip on your radar? Also, corrections are normal, so why are you considering throwing your FIRE plans out the window? A correction like this is not always the harbringer of a recession. No one can know what the market will do.

Laura33

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Re: Strategies for staying calm in turbulence?
« Reply #2 on: February 02, 2018, 10:22:10 AM »
Don't check your net worth several times a day?  ;-)

It strikes me that the problem here is your thinking:  it sounds like you want your account to be a certain dollar amount on a certain date, at which point you will have permission to quit, and so you are anxiously watching the account go up and down to figure out the likelihood of that happening.  And that, of course, is yes!-no!-yes!-no!-yes! anxiety-producing.

So I would suggest moving away from the all-or-nothing thinking and start making plans for different alternatives.  What happens if the market crashes a week before you quit?  What happens if it crashes a week after you quit (because, of course, volatility doesn't go away just because your job does)?  What if future returns are lower than you are projecting?  Usually the answers to these questions aren't "well, I have to work until I'm 70, then, dammit" -- it's, well, I can cut some optional expenses, or I can get a part-time job, or I can try to monetize my hobby, or whatever.  IOW, I bet you in most of those scenarios, you can still find a way to quit your current job and make it work long-term.  Which means that the market hitting XYZ as of [date] is not the be-all, end-all of your existence, and isn't worth so much of your mental attention.

Of course, you could run the various scenarios and then decide that you'd rather just work another X months/years so that you can be confident that you can FIRE on your original budget.  But I can tell you from personal experience that a job feels completely different when you know you no longer need it and are instead choosing to work there for other reasons.  And if it doesnt, well, quitting is always an available option.

And finally, if you go through all of the exercises and there is no way you can make a reasonable alternative work on your planned budget, maybe your budget is too tight, and/or your risk tolerance is lower than you anticipated -- in which case you should re-evaluate your underlying assumptions.  Because the market is going to go down after you FIRE, and there will be [multiple] recessions over the next 40-50 years; the only questions are "when?" and "how bad?"  So you need to feel confident that your plan -- including your various backup options -- will see you through that.

justostash

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Re: Strategies for staying calm in turbulence?
« Reply #3 on: February 02, 2018, 02:11:02 PM »
Really appreciate the sound advice, thank you Laura33 & Lady SA!

So I read your posts this morning and then vowed not to glance at the net worth, market, or news at all today.  I was feeling pretty good, just keeping busy at work. Then this afternoon my coworker walked by and gave me unsolicited market news. I definitely didn't need to know! Hard to avoid the news, isn't it?

Maybe I should only allow myself to do something like check the balance once a month? Just schedule it on my calendar.

I am going to think more about alternatives this weekend.  Thanks!