A Bit of Inspiration for Your Financial Planning …

Financial planning is a continuous job, requiring careful decisions in an often complex market. Most of us could use a little inspiration from time to time.

That inspiration can take many forms. Some may enjoy reviewing charts or graphs, while others may be deeply affected by the successes and tragedies of friends and colleagues. At times, wakeup calls can come from the words of others. With that in mind, we’ve compiled three quotes about finances that may help you stay on track.

“The Stock Market is designed to transfer money from the Active to the Patient.”

From noted investor Warren Buffett, this quote illustrates the fact that investors tend to underperform when they trade frequently. Not only do they pay high commissions and face short-term capital gains tax rates, they are also often influenced by knee-jerk reactions to market events, which can hurt performance. A long-term investing strategy is the best. Look for stocks you can hold onto for many years, through market ups and downs.

“Every time you borrow money, you’re robbing your future self.”

From Nathan W. Morris, a personal finance expert and noted author, this quote suggests that when you take on debt (via a home equity loan or credit card balance, for example), you’re risking your future financial security. When you carry debt, you’re paying interest with money that could have gone toward retirement savings or other important financial goals.

“When buying shares, ask yourself, would you buy the whole company?”

From Australian entrepreneur, investor, investment advisor, and stockbroker Rene Rivkin, this quote conveys the idea that when you buy a stock, you’re buying a portion of a company. You thus become a part owner of the company, so it’s worth considering how comfortable you would be owning the entire company. Do you have confidence in its future? Concentrate your dollars on your best ideas, or the best ideas of your financial advisors.

Market Volatility: Is It a Cause for Concern?

Following U.S. Federal Reserve Chairman Jerome Powell’s press conference in early December 2018, it would have been easy to think the stock markets were ready to ease into a tranquil holiday season and a slow start to 2019.

But that didn’t happen. Volatility roiled the markets, sending many investors into a panic.

This leads to the following questions: what is market volatility, and is it a reason to be concerned?

Market volatility is arguably one of the most misunderstood investing concepts. Formally defined, it’s the range of price changes a stock or market experiences over a period of time.

If the price is relatively stable, the stock or market is said to have low volatility; if the price moves significantly or erratically, the stock or market is said to have high volatility.

Volatility is often measured by the CBOE Volatility Index, known by its ticker symbol VIX, which gauges the market’s anxiety level. At a level near 20 as of this writing, the VIX is relatively low (less volatile market). It was in the 30s this past December; during the financial crisis in 2008-2009, it was in the 70s.

But volatility isn’t necessarily a bad thing.

Most investors focus on downside volatility because they feel a loss more acutely than they do a win. But volatility also provides opportunities for the patient investor. Each purchase or sale of a stock has the risk both of failure and of success.

Without volatility, there is less chance of either.