Use your financial fear as motivation

WASHINGTON — A newscaster broke into the regularly scheduled program with breaking news: The Dow Jones industrial average was down more than 1,000 points. The network began showing frenzied people on the floor of the New York Stock Exchange. As each image flashed across the screen, I became more fearful.

Despite a parade of experts brought on to tell me I shouldn’t panic, my pressure began to rise. So I raced to talk to my husband in the next room.

“Honey, have you seen the news?” I screeched. “Shouldn’t we pull money out? I can’t take this. Honey, why are you just sitting there? Why aren’t you scared? Honey!”

My husband, whom I often call Yoda, calmly turned to me and said, “Don’t you write about this kind of thing for a living? You of all people should understand this is what the market does. We will be OK. We have a plan.”

That was then. October 2008.

This is now.

The Dow again plunged dramatically on Monday, losing nearly 1,100 points shortly after trading opened. The market has since recovered much of its losses. We can’t predict what will happen next, but that one-day ride alone was wild and scary.

This time, my husband told me not to look at my retirement plan. I should have listened.

In just one day, my 401(k) dropped 9 percent. So when experts say investors who are still many years away from retirement shouldn’t panic, I want to slap them. This isn’t chump change. This is my future buying power eroding.

I’m not going to say you shouldn’t be alarmed. Because I understand your anxiety and it is rational. Like many of you, I didn’t come from money or from a culture where stock-market corrections were a thing to endure until the next upturn. I’m a first-generation participant in the markets. My grandmother Big Mama never invested, not even in savings bonds. The only bond she ever bought was the adhesive for her dentures.

But I will tell you this. Use the fear you felt this week as motivation to become better informed about your holdings. Because I know many of you put money into your 401(k) or the federal Thrift Savings Plan and don’t really know what you’re investing in.

Experts tell you that market corrections are a good time to revisit your investment strategy. But you don’t really have a strategy, do you? Heck, you probably don’t open most of the statements you get or go online to check how your retirement plan is doing until there is a major drop. Most plans offer access to financial advice either for free or at low cost. Take them up on it. Now.

In the meantime, let’s look at the roller-coaster rides in the stock market through some songs. Here is my favorite mood music to help put things in perspective and ease my nerves.

• "Yesterday, all my troubles seemed so far away. Now it looks as though they're here to stay. Oh, I believe in yesterday."

I love this Beatles’ classic. It’s OK to lament what was. Grieve. Yes, on Monday, the stock market suddenly wasn’t what it used to be. And because of lingering concerns about China’s economic health, there’s a shadow that may hang over us.

But it’s important to remember why you need to invest. You need the markets so that you can beat inflation over time. And you won’t do that these days by putting your money in a savings account or certificate of deposit.