When you’re following the herd, it’s hard to tell when the herd’s headed in the wrong direction. There’s no doubt that Wall Street is a scary place these days. It’s all the more reason to have a solid investing plan in place, and sticking to it. But one group of investors is letting emotions triumph over planning. This is MoneyWise Live - biblical wisdom for your financial decisions. <ul><li>Which group am I talking about? A recent survey by Ally Financial revealed that almost half of millennials, roughly aged 25 - 40, have sold investments during the past volatile year. The poll also showed that other age groups, for the most part, have stuck with their investing plans. There’s an old joke that the best investment advice is, “buy low, sell high”, but millennials don’t seem to have gotten the word. If you’re following a long range plan, and the wisdom of that joke, NOW would be a good time to BUY, not sell.</li><li>Certainly there’s been a lot of bad news this year to scare investors, the highest inflation in 40 years, the Russian invasion of Ukraine, and the Fed raising interest rates, seemingly on a collision course with recession. Those bleak reports have apparently affected millennials the most, as 49% of those surveyed in August said they’d sold stocks over the past 12 years. Compared to just 21% of investors in the demographic we know as Gen X, ages 42 to 57. Interestingly, still FEWER investors outside those two groups, gen Z, ages 18 to 25, and some baby boomers, ages 58 to 67, sold stocks in the past year.</li><li>Why are millennials selling off to a far greater extent than other age groups? And remember, these are folks 25 to 40. It could be that they're under more financial strain than others. This might include trying to buy a house, and skyrocketing home values in the past year haven’t helped there. Or, they could be facing more expenses raising children, or caring for elderly parents, who may not have put away enough for retirement.</li><li>But even if millennials are selling stocks for what might seem to be the right reasons, it’s still the wrong TIME to sell if you’re following a long term investing plan, looking ahead at least 5 years if not 10. For those folks, a bear market is a GOOD thing because of dollar-cost-averaging, and it’s something that most investors should be doing. We’ve talked about the beauty of dollar-cost-averaging before, but it’s worth going over again:</li><li>DOLLAR-COST-AVERAGING - When you contribute a consistent amount each month to your retirement account, you’re automatically dollar cost averaging. That could be in stocks, mutual funds or whatever and you do this no matter what the market’s doing. This eliminates all the guesswork. You’re not trying to figure out what the market is likely to do next month or next year. You’ve already made an investing decision based on a long range plan. And this is following one of God’s financial principles, found in Proverbs 21:5, “Steady plodding brings prosperity; hasty speculation brings poverty.”</li><li>If this seems like a mindless way to invest, it isn’t. It’s actually very smart. That’s because by contributing a consistent amount each month, you’re automatically buying fewer shares when prices are high and stocks are expensive. Then, when stocks are down, like they’ve been this year, and you still invest the same amount each month but you’re buying MORE SHARES. So no matter what happens on Wall Street, you’re always building maximum equity at minimum cost.</li><li>Dollar cost averaging doesn’t give you big wins overnight but it gives you LONG TERM GAINS. And if you stick with it and don’t pull your money out when things look bleak, those gains can be substantial.</li><li>Let’s say a bear market lasts 6 months, a year, or even longer. With dollar cost averaging, you’re laying the foundation for significant gains down the road. When the market recovers, all those extra shares you bought when prices were low will be worth more, greatly increasing the value of your portfolio.</li><li>Most of us work pretty hard to save and invest. It’s just human nature to have some emotional attachment to those dollars. But emotions are dangerous when it comes to investing. They tend to CROWD OUT LOGIC and reason. Dollar cost averaging takes the emotion out of investing.</li><li>It eliminates the possibility that you’ll make a bad investment decision, like selling when the market’s down and locking in your losses. Or buying more when stock prices are high. It forces you to think long term instead. If you’re a millennial investor, or any investor for that matter, STICK TO YOUR LONG RANGE PLAN and don’t let your emotions take over.</li></ul>On-Air Mention: <ul><li>If you’re a millennial yourself or have a millennial in your life that you care about, it may help to have some professional help on investing decisions. And more importantly, speak with someone who can provide counsel that aligns with your Christian values. Consider finding a local Certified Kingdom Advisor. These financial, insurance, and legal professionals have completed a certification program to give biblically wise financial advice as part of their practice. They’re located across the country, and you can find a local CKA professional by going to moneywise.org and clicking the "Find a CKA" button on the homepage.</li></ul>Next, Rob answers these questions at 800-525-7000 or via email at Questions@MoneyWiseLive.org:<ul><li>If you just began a retirement fund with University of Florida and apportioned it with 40% Bonds, 50% Equity and 10% a Real Estate annuity fund but you've heard annuities aren't a good investment, is the last choice OK?</li><li>If you just opened a high yield savings account at Ally and you noticed they have CDs that pay more, should you move it over into the CD?</li><li>Can you purchase I Bonds with 401(k) or IRA funds?</li><li>If you're getting married soon and both you and your fiancé are in your 50s and you both own primary residences and you're considering combining your funds to buy into one home, how does that affect capital gains tax?</li><li>If you and your wife have 401(k)s but you don't want to invest in the market, should you move them into CDs?</li><li>If you just moved and you now have a larger monthly payment, things are a bit tighter with student loans looming, how can you prioritize saving over paying off debt?</li><li>If you have a tax deferred pension with about $14,000 and you've been told you have options to either leave it alone, roll it into a traditional IRA or take a lump sum, should you take the lump sum and put it into and I Bond?</li><li>If you're recently married, have no debt except for your mortgage and you have about $50,000 in your savings account that's not earning much, is this a good time to invest that money?</li></ul>&lt;&lt;&lt; MoneyWise Market Update with Bob Doll &gt;&gt;&gt;<ul><li>We came off another strong week, what do you make of the market now?</li><li>When considering where we find ourselves, a challenging environment yet sentiment seems to be improving, earnings are "less bad" than expected, what do think about the environment moving forward? </li><li>Would you agree that this gives a signal that once the bad news has flushed through the market, whether now or after another down-leg, there's plenty of money on the sideline and we will head higher and do so quickly?</li><li>Obviously, the election is on the minds of a lot of Americans.. how does this play into market, sentiment and the economy?</li></ul>Be sure to check out the rest of MoneyWise.org to connect with a MoneyWise Coach or access our books and our many free helpful resources. You can also find us on Facebook (MoneyWise Media) and join the conversation. Thanks for your prayerful and financial support that helps keep MoneyWise on the air. And if you'd like to help, just click the Donate tab at the top of the page.

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When you’re following the herd it’s hard to tell when the herd’s headed in the wrong direction. No doubt Wall Street is a scary place these days. Good reason to have a solid investing plan but some investors are letting emotions triumph over planning.

The Great Millennial Sell Off

FaithFi | Oct 31, 2022

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