I wanted to share with you some great tips from a letter we sent out to all our Abacus clients in response to the current maelstrom in the market. Perhaps these tips will help you to remain financially safe, sane and calm as you navigate this storm.
When experiencing financial distress, our natural inclination is to want to DO SOMETHING. With investing, this usually backfires. Here are three things we recommend to help cope with these turbulent times:
1. Consider decreasing your discretionary spending in the short run, and then re-evaluate the need to reduce longer-term spending in January. While the dollars may not seem like a lot, shifting the momentum from “Yes” to “Not right now” has a tremendous psychological effect, and over time, a very positive financial impact as well. Furthermore, if you can afford to trim back your monthly distributions from your Abacus account, now is a great time to do so.
2. Refinance your mortgage if you have less than two years to go in your fixed rate period (assuming you plan to stay in the home long-term), or if your rate is above today’s rates. Call or email your advisor for a good mortgage broker recommendation if you don’t have one.
3. If you have more than $100,000 in any one bank, wire the excess into your Abacus account so that we can invest it. As famed investor Sir John Templeton said, “To buy when others are despondently selling and to sell when others are avidly buying takes the greatest fortitude and pays the greatest reward.” Now is such a time. Even if you’d prefer to have your extra cash in money markets, they will be more secure at TDAmeritrade than in a non FDIC-insured account at your bank.
In summary, this too shall pass. We believe that owning a diversified global mix of over 11,000 equities, along with a healthy dose of real estate, bonds and commodities, is the best way to ensure your financial freedom in the future.
Please feel free to call Abacus with any questions or concerns. We can be your lighthouse, here to help you navigate this storm
I will be leading a Yoga of Money workshop at Yogaphoria, in New Hope, PA the weekend of October 24-26, 2008, and a Business of Yoga session there on Sunday, October 26th at 10:30am. Come join me to learn how to survive this economic crisis and crash-proof your finances.