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Investing Worries? Avoid Panic Selling and Keep a Long-Term Perspective

admin • May 15, 2023

Investing is a key strategy when it comes to building wealth over the long term. But as important as it is, a lot of people find it intimidating. Investing isn’t risk-free, which can often create worries for our clients—especially during an economic downturn.

If you keep a close eye on your individual investment accounts, you know why. During economic downturns, you might see the value of your portfolio plummet. And it can be terrifying. 

When this happens, many people have the urge to make an emotional—not logical—decision and sell their investments. But this is a big mistake.

If you’re tempted to abandon your investments as soon as the economy starts to look dicey, pause and take a deep breath. Below we’ll show you why panic selling is a bad idea—and how approaching your investments with a long-term, level-headed approach can help you build more wealth over the years. 

Emotional Decision-Making Doesn’t Work for Your Investments

Money is emotional. Anyone who’s ever felt a sense of guilt or pleasure when spending money knows this. When it comes to spending, your emotions can help you make financial decisions in line with your values. But when it comes to investing , these types of decisions can quickly derail your financial strategy. When investing long-term, you must leave your emotions out of the picture.

Why is it so important to avoid emotional decision-making? In short, your emotions during a market downturn—fear, panic, anxiety—cause you to want to do the opposite of what’s best for your portfolio. Emotional decisions don’t take your long-term plans into account. Instead, they only consider the present moment.

When you sell an investment because you’re panicking at the moment, you miss out on the opportunity for that investment to continue to grow. And even though it may not sound like a big deal, missing out on these opportunities can make a huge difference in your portfolio. 

For example, if you invested $10,000 in the S&P 500 in 1999—and left your investments alone through 2018—you’d have ended up with just shy of $30,000 twenty years later . However, if you panicked and missed the best 10 days in the market during that same 20-year period, you’d have ended up with less than $15,000 .  

So, how can you avoid emotional decision-making? A long-term perspective is key.

Invest With a Long-Term Perspective

The key to a good investment strategy is thinking long-term and even looking back at history. If you look at data from any major market downturn over the last century, what happens after each? 

A market up turn. 

Yep—even though recessions can leave a lasting emotional impact, history shows that the market recovers. And these downturns may be shorter than you think—since the end of WWII, the average length of a recession was less than 11 months . 

What does this mean for an anxious investor? When you’re tempted to sell in a panic, remember that the market has always recovered, on average, within a year. 

Keep this long-term perspective in mind when creating an investment plan. Generally, you can afford to take on more risk the further away you are from retirement. Because even if your portfolio loses value during a market downturn, you’ll have plenty of time to let the market recover. 

As you approach retirement, you’ll likely want to reallocate your investments so your portfolio is more conservative. Doing so will ensure that if the market takes a downturn when you’re a few years away from retirement, you won’t see a dramatic drop in your portfolio’s value. 

Investment strategy examples

You can’t control the market, but you can control your investment strategy and the decisions you make. There are countless ways to invest, but here are a few strategies that can help you plan long-term:

  • Index investing: This strategy allows you to invest in a diversified range of securities through a single, passive fund, usually at an affordable price. The goal of an index fund is to replicate the performance of a particular index. 

 

  • Dollar-cost averaging: Dollar-cost averaging is the process of purchasing investments consistently over time at a fixed cost. This strategy smooths out the cost of buying securities so when the market is down, you can get a bigger bang for your buck. 


  • Buy-and-hold investing: In short, this is the strategy we suggest to anyone hoping to avoid panic selling. Rather than trying to time the market, buy-and-hold investing means you buy investments intending to hold them long-term. This strategy relies on a long-term perspective.

 

These strategies, along with others, aren’t mutually exclusive. It may be worth talking with a financial advisor to determine which investment strategies will work best for you, your risk tolerance, and your goals.

4 Tips for Reaching Your Investment Goals (Without Panic Selling)

We can tell you again and again how important it is to avoid panic selling, but it also helps to have some practical tips to put into practice. Here are a few to employ right now: 

1. Have a cash buffer.

When you’re trying to dig yourself out of debt, an emergency fund can keep you from falling back on credit cards. But an emergency fund isn’t just for keeping yourself out of debt, it can keep you from being tempted to cash out your investments, too.

Having a cash buffer on hand will prevent you from being tempted to sell your investments if you get into a situation where you need cash. Know how much money you need to have on hand to feel safe in case of an emergency, and turn to this buffer, instead of your investments, when needed.

2. Don’t use investing for short-term goals.

If you want to pay for a wedding, a house, or your kid’s college education within the next year or two, don’t invest that money. The market may take a downturn, and, when you need the money, it will have lost value. 

When it comes to short-term deadlines, you can’t afford more time in the market for your investments to recover if they happen to lose value. Instead, only use investing for long-term (and sometimes medium-term) goals. And consider a high-yield savings account for short-term goals. 

3. Disconnect from the media (and your investment accounts).

When all you hear and read in the news are anxiety-inducing stories about the bleak economy, it’s no wonder you’re tempted to panic sell and abandon your long-term plan. The doom and gloom are enough to make anyone want to pull out their cash and avoid the tumult. Similarly, checking your account balances during a downturn can be panic-inducing. So just avoid it altogether. 

Instead, rest easy knowing you’ve planned your investments wisely, and temporary market downturns won’t disrupt your strategy in the long run.

4. Get professional financial planning help.

You can plan long-term, avoid looking at your accounts, and save up a generous cash cushion, but sometimes it’s worth the peace of mind to consult a professional, too. If you have any doubts about your investment strategy — or simply want a second opinion — a fee-only fiduciary financial advisor can help. 

Whether you want to leave the strategy to a professional or you just need someone to talk you down from panic selling, it pays — literally — to have an advisor with your best interests at heart. 

Ready to team up with a financial advisor to make sure your investment strategy is capable of long-term success?

Give us a call at 877.333.1015, email us at info@fivepinewealth.com , or visit our website to learn more about what it’s like to work with us.

The Millennial Advantage: How to Use Your Generation’s Strengths to Build Wealth

March 28, 2025
Despite always hearing about the aging of America and the baby boomer generation, did you know the millennial generation is actually the largest age group in the country? Born between 1981 and 1996, millennials outnumber baby boomers post-WW2, with about 72.2 million millennials in the United States, as of 2023. The media often highlights millennials' financial challenges: mountainous student loan debt, a competitive job market, unaffordable housing, and credit card debt. There’s no doubt it’s been more challenging for millennials to save and gain a stable financial foothold compared to previous generations. Yet despite these hurdles, millennials have financial opportunities available to them that previous generations did not. Millennials came of age with the rise of the internet and advances in technology; they’re digital natives, incredibly tech-savvy, and well-positioned to master the digital era they live in. Millennials’ unique position in history gives them advantages when it comes to investing, starting a business, and increasing their financial literacy. Millennials and Investing Millennials are changing the game when it comes to investing—innovative financial platforms and investment products have helped to evolve the investment landscape, and have made investing more accessible than ever before. As a millennial, embracing this innovation can help move you closer to achieving your goals and building a financially secure future. Impact Investing Millennials are known for being socially conscious with their spending and supporting brands and companies that align with their values. This desire to make a difference often extends into their investments—intentionally choosing to invest in companies that reflect their values and promote the causes they support. Through impact investing, you can support positive global change while also working toward your financial goals. Impact investing can be done through investing in Environmental, Social, and Governance (ESG) investment funds, or through pursuing a strategy of Socially Responsible Investing (SRI). ESG funds focus on businesses that have strong environmental policies, social impact initiatives, and good governance. These funds have become increasingly popular with investors, like millennials, who want to support companies that prioritize sustainability and ethical practices. SRI focuses on investing in companies that promote environmental sustainability, social justice, and corporate ethics. SRI can also exclude investing in companies that engage in activities that are considered negative or harmful—tobacco, alcohol, fossil fuels, firearms, or the defense industry. Cryptocurrencies and Decentralized Finance Cryptocurrencies are newer investment frontiers that techie millennials can be more comfortable exploring than older generations. Crypto such as Bitcoin and Ethereum are digital currencies that operate on blockchain technology , which provides increased transparency and security. Crypto investments can be risky, but can also offer high rewards. Decentralized Finance (DeFi) platforms also leverage the security and transparency of blockchain technology to offer decentralized financial services and transactions. DeFi platforms provide opportunities for lending and investing without traditional intermediaries like banks and other centralized institutions. For millennials, DeFi represents a cutting-edge way to engage with financial services and they can offer more control and potentially higher returns than traditional methods. The Power of Time One of the biggest advantages millennials have when it comes to investing is time. If you start investing early, you can benefit from compound interest and long-term investments, which can significantly boost your returns and help increase your wealth. Compound interest is the process where the interest you earn on an investment is reinvested, which generates more interest. The longer your money is invested, the more it can grow. Even small, consistent contributions to your investment portfolio can accumulate substantial wealth over time. Having a long-term investment horizon allows you to ride out market volatility, and capitalize on growth over time. By not reacting to short-term market fluctuations, you can achieve more stable returns. Long-term investing is a powerful tool that can help you build a secure financial future. Millennial Entrepreneurship This generation’s core characteristics set them apart as innovators and business creators. As digital natives, millennials have a strong grasp of technology which allows them to leverage digital tools such as social media marketing, e-commerce tools, and data analytic platforms to grow their businesses exponentially. You’ve likely seen peers thrive in their ventures through their use of social media, which has become a critical tool for marketing, brand building, and customer engagement. Community-building is also highly valued among this generation—the use of LinkedIn alone helps entrepreneurs connect with fellow collaborators, business owners, and mentors. Similar to aligning your investments with your values, you can easily integrate your ethical beliefs into your business ventures. Ethical business practices such as developing eco-friendly products, creating an inclusive workplace culture, and advocating for fair trade processes can make a positive impact and build loyal customer bases. Millennials and Financial Literacy The millennial generation has more resources than ever to increase their financial literacy. Free online finance courses are easy to access, readily available, and enable you to educate yourself so that you can make smart financial decisions to help you achieve your goals. Personal finance apps like Mint and YNAB (You Need a Budget) can also increase your financial literacy by helping you understand and manage your finances more effectively. They offer features like budget tracking, expense management, and financial goal setting to help you be in full control of your finances. Finance apps make it easier for you to stay on top of your financial health and make informed decisions in managing your money. Work with Us to Reach Your Goals  Ever-evolving technology has transformed the financial landscape significantly over the last few decades and millennials are more prepared to take advantage of that transformation than any generation before them. While you can take charge of your finances on your own, working with a financial advisor can help you find your path and stay the course of your journey toward financial security. Financial advisors can provide advice that is tailored to your individual circumstances, to better meet your unique needs and objectives. At Five Pine Wealth Management , we’re committed to helping you create a customized financial plan and investment strategy to help you reach your current and future goals. As fiduciary financial advisors, we always act in your best interest in every step we take with you on your financial journey. We also offer virtual financial planning for millennials looking to fit financial planning into their own schedules. To see if we can help you, email us or give us a call at 877.333.1015 today to schedule a meeting.

Just Got a Raise? Implement These 5 New Strategic Wealth Opportunities

March 21, 2025
Getting a raise is an exciting moment in your career and financial journey. Maybe you’ve gone through an executive-level position change and received a 10% pay bump or an internal promotion yielded you an additional 15%. Regardless of how you got your raise, you’re now in a unique position to move the needle on your long-term financial goals (and maybe splurge a little, too). But before you pull the trigger on that major purchase you’ve been eyeing, it’s important to have a long-term plan for the extra money in your paychecks. Even a significant raise can erode quickly if you suddenly upgrade your home, start vacationing like a celebrity, or snap up that Mercedes you’ve been eyeing. Below are our top five strategic wealth opportunities for you to consider the next time you receive a raise. First Things First: Understand Your New Numbers A 10% or 20% raise may sound like a huge boost, but not all that money will land in your bank account. Before making any financial moves, it’s important to calculate your new take-home increase after taxes and contributions. For example, if you receive a $25,000 raise on a $175,000 salary, you might expect $2,083 more per month. However, after accounting for federal taxes, state taxes, and other deductions, your actual monthly increase might be closer to $1,500. Knowing your actual take-home pay helps you set realistic expectations and make informed financial decisions. Getting a Raise: 5 New Strategic Wealth Opportunities For high-income earners, getting a raise isn’t just more spending power—it’s an opportunity to build lasting wealth while minimizing taxes. Instead of falling into lifestyle creep, consider these five wealth-building strategies to maximize your higher income. 1. Grow: Maximize Tax-Efficient Investment Opportunities With your increased income, you now have more opportunities to maximize tax-advantaged accounts and investment vehicles. For 2025, you can contribute up to $23,500 to your 401(k), plus an additional $7,500 if you're 50 or older. If you weren't maxing out your contributions before, your raise provides an excellent opportunity to reach these limits. Let's say you direct $750 of your new monthly take-home pay to your 401(k). You not only build retirement savings but could save approximately $2,160 in federal taxes annually if you're in the 24% tax bracket. Consider increasing your retirement and investment contributions by the same percentage as your raise. For example, if you receive a 10% raise, aim to increase your contributions by 10% of that raise. This incremental adjustment will help ensure you can maintain the lifestyle you're accustomed to when you retire. 2. Save: Optimize Tax Strategies to Reduce Liabilities A higher income often means entering new tax brackets, making tax efficiency more crucial than ever. Without proper planning, you might find a significant portion of your raise going to Uncle Sam instead of building wealth. Consider switching to a high-deductible health plan (HDHP) for your family, which can lower your premiums while giving you access to a Health Savings Account (HSA). In 2025, you can contribute up to $8,550 for family coverage , potentially saving around $2,000 annually in taxes. Additionally, the money in your HSA grows tax-free and can be withdrawn for qualified medical expenses without tax liability. 3. Diversify: Explore Alternative Investments A higher income can open the door to new investment opportunities, allowing you to diversify beyond traditional stocks and bonds. Alternative investments like real estate investment trusts (REITs) can provide exposure to different asset classes, potentially offering both passive income and long-term appreciation. These types of investments often move independently of the stock market, helping to balance overall portfolio risk. They can also offer lower barriers to entry compared to direct property ownership or other traditional alternatives. The key is to align your investments with your risk tolerance and liquidity needs while taking advantage of opportunities that complement your existing strategy. 4. Strengthen: Build Your Estate With more income comes greater potential for building generational wealth. Investing half of your $25,000 raise annually for 20 years with a 7% return could add over $500,000 to your estate. This makes it essential to have proper structures in place for efficient wealth transfer. To ensure your wealth transfers efficiently, consider: Trusts to protect assets and minimize estate taxes Life insurance strategies for wealth preservation Family-limited partnerships for multi-generational wealth planning These structures become increasingly valuable as your wealth grows. 5. Impact: Upgrade Your Philanthropy & Social Impact There's something powerful about reaching a place in life where you can give back meaningfully. Beyond the personal satisfaction of a higher income, this new chapter brings an opportunity to create lasting positive change in your community and the causes closest to your heart. Maybe you still remember the community college professor who believed in you when you weren't sure about your path. Now, twenty years later, by creating a donor-advised fund (DAF) to support student scholarships, you're not just making education more accessible—you're giving another student their own life-changing mentor. By thoughtfully structuring your charitable giving through vehicles like DAFs or qualified charitable distributions from retirement accounts, you can maximize both the impact of your generosity and the tax benefits that come with it. After all, effective philanthropy isn't just about giving money away—it's about creating meaningful change in the ways that matter most to you. Red Flags: Top Signs of Lifestyle Creep While getting a $25,000 raise provides excellent opportunities for wealth building, it's important to avoid (too much) lifestyle creep. That upgraded car lease might cost an extra $200 monthly, the bigger house another $800 in mortgage payments, and the premium credit card's annual vacation package another $400 monthly in travel costs. Before you know it, your entire raise can get absorbed by new expenses. While there's nothing wrong with enjoying the fruits of your hard work, the key is being intentional about which lifestyle upgrades truly matter to you. Here are some common warning signs that lifestyle creep might be eroding your raise: Your monthly expenses rise automatically with your income You upgrade multiple lifestyle aspects at once (housing, car, travel, dining) Your savings rate remains unchanged despite higher earnings Luxury spending becomes your new normal Your cash reserves aren’t growing despite a higher paycheck Instead of automatically increasing spending across the board, take time to identify the one or two changes that would bring the most joy and fulfillment to your life. Then, invest the rest. Put Your New Money to Work with Five Pine Wealth While these strategies focus on wealth building, don't forget to invest in yourself through continued education, health, and meaningful experiences. The key is finding the right balance between growing your wealth and enjoying the fruits of your success. Whether you've recently received a raise or are anticipating one soon, having a plan in place can help you maximize this opportunity. Our team can help you evaluate which of these strategies would work best for your unique situation and create a customized plan to help you reach your financial goals. At Five Pine Wealth Management , we can help you implement these strategies in a way that aligns with your personal goals and values. To learn more about making the most of your increased income, schedule a meeting with us. Email us at info@fivepinewealth.com or call us at 877.333.1015.  Let's work together to transform your raise into lasting wealth.
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