Stock market got you down? In this episode of Financial Clarity for Doctors, Corey and Rachelle chat about how expectations of stock market performance stack up against the reality we deal with from year to year. How we deal with our expectations can have an impact on how we react to volatility, and therefore how our investments perform long term.
In this episode we’ll chat about:
- The average return is not the expected return each year
- How widely can returns actually range?
- How to anchor your expectations in the reality of a volatile market
- Diversifying across various types of companies
When it comes down to it, a lot of financial planning (including investing) is behavioral. Generally, we have a stronger emotional reaction to negative outcomes than we do to positive outcomes. The bad seems twice as bad as the good seems good. For long-term investors, consistency is important, so we have to be very careful to keep all of this in perspective.