The ongoing trade war initiated by President Donald Trump has sent shockwaves through the stock market, causing significant volatility. As investors grapple with the uncertainty, self-made millionaire and author Ramit Sethi shares his insights on what not to do and the key strategy change he has made to his personal finances. Sethi strongly advises against panic selling investments during turbulent times.
“Slow down and don’t panic,” he said. Times like this can cost investors millions of dollars because of rash decisions they make. The most important thing you can do is avoid selling your investments out of panic.”
For those nearing retirement, Sethi recommends staying the course.
If you are close to retirement, ideally, you would have already adjusted your asset allocation to be more conservative.” He also suggests avoiding constant checks on investment accounts to prevent impulsive decisions. In addition to not panic selling, Sethi warns against over-optimizing investments. A lot of folks right now are saying, ‘Hey, what if I just invest extra because the market’s down?’ That sounds really smart, but that’s really just market timing,” he said.
Ramit’s strategy amidst market turbulence
Instead, he advises sticking to a steady investment plan. If you have extra money and already have a 12-month emergency fund, Sethi says it’s okay to invest more.
However, he emphasizes that market predictions are uncertain and suggests setting up automatic contributions to investment accounts to maintain consistency. Amidst the President’s tariff announcements, Sethi himself has refrained from making drastic changes to his investments. The only thing I’ve done is to start to build up an even larger savings account,” he said.
He stresses the importance of having a substantial emergency fund given the current market uncertainty. “When companies see uncertainty, they retrench; when they retrench, they lay people off,” Sethi noted. For those with extra money, he recommends focusing on building a sizable savings account to navigate through uncertain times.
In summary, Sethi’s advice is to avoid panic selling and over-optimizing investments during market chaos. Instead, he suggests maintaining steady investments and ensuring a substantial emergency fund to weather the uncertainty.
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