“Take No Financial Action” in Downturns?! No Way!

Shameful! I recently read a financial advice article titled, "In a market downturn, the best action may be to take no action. Here's why." I will not link to the article I read this in, because it's a completely irresponsible concept 🤪

Some financial advisors will tell you to “sit tight”, “don’t worry”, “trust me”, and that everything “will work out eventually”. This is just… the worst advice ever. You wouldn’t take that advice in your job, in your relationships, or tell that to your kids… why on earth would that fly for your financial plan? 🤨

Here are 3 responsible actions you can take to protect yourself and your family when there is a downturn in the economy 😃👍

1. Refinance your mortgage 🏡 Oh this one is so good! Take a look at your mortgage statement- how much equity do you have in your home? How much longer do you have on your mortgage? What is your interest rate?
   If you have equity over 22% but you’re still paying PMI (a “mortgage insurance” charge); if you have 28 or more years on your mortgage- or 15 or less- or if current interest rates are lower than the rate on your mortgage; then call a mortgage broker for a consultation. Consultations are always free! 👩🏻‍💻 💲
   You could save tens of thousands of dollars by refinancing from a 30-year to a 15-year; getting a lower interest rate; or removing PMI from your payment* 😮😊
   Even if you’ve refinanced recently, it may still pay to look into it; some mortgages can offer no-cash-at-closing options. A friend refinanced his mortgage 5 times in two years- his partner thought he was nuts, but he ended up with great terms and a great rate, and paid off his house years early! 🤗
   *Note that removing PMI does not require refinancing your whole mortgage, but being able to do both can really improve your mortgage situation.

2. Don’t act on fear. It is true that those who “drastically*” change their portfolio during a downturn tend to lose- to the tune of 8% more than those who make small or no changes 😲😖
   Remember, emotions drive our desires in how we spend/save/use money, but making money decisions based on an emotion- like fear!- usually ends in disaster 😥
   As they say, economists have predicted 9 of the last 5 recessions 😆
   So be alert; look ahead to trends and possible changes; but do not let those trends create so much fear that you make poor financial decisions 🙂
   You can make small changes, based on best money practices and advice from your money person, without endangering your portfolio. Just make sure that you’ve been thinking about those changes for a while, and now is simply the best time to make those changes 👍
   * “Drastic” changes were undefined in the article I read.

3. Don’t lose money you can’t afford to lose. Did you know there's a way you can grow your money without losing it in market downturns? 🤔
   This is a strategy my partner and I use; I like to say, "It’s not a plan that’s perfect for every dollar you save- but it's perfect for the dollars you don’t want to lose" 🤣
   Okay, smartypants, why doesn't everyone do this if it's so great? 🤨 Well, some financial advisors don't use this method, because they’re working with averages & many clients & larger amounts of money compiled from all those clients. Because of that, they don’t focus on each hard-earned dollar that is so important to you as an individual, knowing that “over time” and “over an average”, “things will work out” 🙄
   I put these platitudes in quote marks because I do not agree that that is the right attitude to taking care of each family we work with. When you keep money in investments that lose- even a little bit- you have to earn money to make up for loss before you ever pay yourself or grow your wealth. I don’t think that losing money is a wise course of action, ever, when it’s so easily avoidable! 😕
   And, this smart-money method actually nets you more $$$ than stock market investments in the long run, because you’re not paying income taxes OR capital gains taxes on your growth 🤯💲💲💲

Never feel out of control of your money, even if the economy is not looking so healthy. There are always actions you can take to protect yourself and your family; take advantage of down times; and improve your financial situation 😁💸

Now That’s Smart Money 🧐