I am a believer that our most important financial asset is the cash we keep in our various savings, which is why I stress the idea of building savings and doing so automatically. I’ve also pointed out my approach to putting most of my savings to work away from the stock market. These are the monies that will help us strive in times of uncertainty, allowing us to stay focused during stock market turmoil while our money exposed to the market is being affected.
We often want to embark upon individual investing, even while our savings have no footing as yet. This current environment should help remind us why it is important to build those savings and appreciate a good financial structure. Even though interest rates have been going lower over the past year, we should still stay on this path.
One of the first steps to saving is contributing money to an employer-sponsored retirement plan. These plans should always reflect the risk tolerance for our individual age group, in that our risk exposure should be reduced as we age. The performance of these funds is part of what gives most of us anxiety when the market is performing unfavorably. However, if we maintain the disciplines mentioned, when the market is behaving in the manner we are seeing surrounding the Coronavirus fears, we would be in a position to take advantage of the opportunities said market presents.
Therefore, if we were contributing to an employer-sponsored Retirement plan when the market was much higher, it then makes sense to keep contributing while it is lower and even increasing the contribution amount if we can afford to. This could have a positive impact on the average cost of our investments.
When the stock market is going up, it is easy to get lulled into thinking it will keep going up forever and it is often joyful. However, when it is going down, it can seem like the end of the world. A good financial structure makes it just a little easier to tolerate and allows us to take advantage of opportunities as we continue to enjoy our lives.