Harnessing the ‘Power of Now’ To Improve Your Investment Mindset

As we approach the one-year mark of the COVID pandemic, many of us are hitting isolation fatigue. We are longing to get back to ‘normal’ and according to Melissa Auerbach, an assistant professor in psychology at Temple University who studies stress and health risk behaviors, people have limited mental resources for self-control. “We have all of these factors depleting self-control, like the recession, the pandemic, and not being able to socialize like we used to. All this is very outside of our wheelhouse in terms of how we normally deal with self-regulation and self-control of behaviors.”[1] So how does this impact your investment strategy? In my many years in this business, I have experienced the savings and loan crisis, the dot com and real estate market busts, September 11 and now COVID-19. There will always be external forces that may cause irrational investment decisions, but my best advice: do not get too tactical and make many short-term portfolio changes and react emotionally. It is all about harnessing the Power of Now.[2]

Regulating Emotional Decision-Making

Emotional thinking can be a big driver when making decisions. But as I mentioned before, there will always be outside forces that we cannot control. So how do we handle emotions when it comes to finances and planning? The Power of Now philosophy is one that suggests you ask questions, “Who am I? Where do I want to go? What are my needs? What is driving me to make decisions?” Years from now, we will remember 2020, have moved on from COVID, and be challenged to not let that experience control our lives or impact our futures. When we start reacting and thinking too much based on emotions, we may make decisions not in our best interest. Try living with the emotions, sit with them, and let them sink in. Instead of fighting them and acting rashly, accept them, and act based upon the reality of your current situation.  In this specific moment, COVID-19 does not change what I want for my family and what I want in the future. Reacting to outside noise, leading to short-term, emotional decisions, may take you off your life’s path.

Keeping the Ego in Check

My Bible for the last 10 years has been the Power of Now and how it relates to ego. What I have observed, working with clients for decades, is that ego drives us-- whether the impact is positive or negative.

The philosophy of The Power of Now is that the ego is powerful in most of us and drives much of our behavior.  For many years I have worked with business owners and helped them through the process of selling their business. Not long after they retired, I started getting calls from clients asking to go to lunch. These were people 65+ year old, who had more money than they could ever spend, yet were totally lost in life. Their ego was telling them they were a successful business owner and with that stripped away, they felt they had lost usefulness and purpose. Their identity was so ingrained as a successful business owner (ego), they were now lost and empty, when this was stripped from them. What I try to instill in clients is being a business owner is what you do, not who you are. Taking cues from the Power of Now, life is simple, but it exists in a continuum. There is stuff going on all the time. Whether good or bad things are happening, that is life’s journey, and it ultimately does not define who we are.

When clients discuss with me how to spend time in retirement, we talk about finding hobbies, identifying your passion, and determining what is going to create fulfillment. Exiting your past business, does not obviate your passion for starting a new business, or becoming a consultant. With financial independence, they have unlimited opportunity. During our planning process, we not only talk about money, but- what is arguably more important- how to maintain “purpose and usefulness” in retirement. Much of the focus in our planning process is to proactively approach how we shall live the rest of our life.

It seems like we are approaching the light at the end of the proverbial pandemic tunnel, and kudos to everyone, as it has not been easy. Just remember, we live in an ever-changing world and there will always be outside forces that challenge our decision making. However, before reacting emotionally or being controlled by ego, make decisions grounded in the “Now.” The past is the past and the future is just that, the future. Do your best to understand who you are and set long term and financial goals accordingly. If you need guidance, we are here. At the very least, we are here to talk and provide perspective about your new phase of life. It may be challenging, but also exciting and fulfilling.

Any opinions are those of Brent Soloway, ChFC® and not necessarily those of Raymond James.  Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Past performance does not guarantee future results.

[1] People are still engaging in risky behavior, despite rising COVID-19 cases. Psychologists explain why.

[2] The Power of Now