Fear and Greed

You may not be aware that there is an indicator for the stock market called the Fear and Greed Index.  This is a measure of what emotion is driving the market, which affects the price of stocks.  It is measured on a scale of zero to 100, with 100 being extreme greed and zero being extreme fear.  In the last 12 months, this index has shifted from a low of nine last spring to a high of 92 this week.  Quite a shift of emotion!

With all of this volatility, it stands to reason that investing is not for the faint of heart.  That’s why it is so important to have a long-term financial plan in place.  When there is no plan, the risk of losing money in the market is quite high.

A plan can give you a track to run on.  When you know how much you need to save for retirement, or a new washing machine, and you have a plan to save for those items, it makes the temporary ups and downs of the market a little easier to handle.  Many times the plan has to change course a little, but it’s easy to get back on tract, even if it means putting off retirement or that purchase a little while longer.

Too many times, people wait until they are ready to retire before they look at their portfolio to see how much they will have to live on, and discover to their horror that it’s not enough.  Or, they find that they need to buy that washing machine, and have no savings to fall back on, thus leading them to pull out the plastic and paying high interest rates.

If you don’t have a plan, it is extremely important to start working on one now.  Contact your local bank or financial advisor for help in making those all important plans for the future.

You can also visit the AICPA financial planning website, www.360financialliteracy.org for information on budgeting and spending, planning, and other helps for planning your financial future.

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