facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog search brokercheck brokercheck
%POST_TITLE% Thumbnail

Bad News Sells: What the Media Doesn’t Tell You About Investing and Financial Planning

By Marjorie L. Rand, CPA, CFP®, RICP®

In our modern, fast-paced society, the media serves as a vital source of information, keeping us updated on current events and economic trends. Yet amidst the multitude of voices vying for attention—from local news outlets to national networks and online platforms—it’s easy to feel overwhelmed by the constant influx of information.

When it comes to the realms of investing and financial planning, it’s crucial to understand that the media often amplifies bad news and may not always provide accurate information. Let’s dive into the reasons behind this, and shed light on what lies beyond the captivating headlines when it comes to the world of investing and financial planning. Read on to discover the truth beyond the noise and equip yourself with the knowledge necessary to make informed financial decisions.

Why Bad News Sells

The media thrives on sensational stories. News outlets know that people are more likely to click on articles and tune into broadcasts that feature dramatic headlines and negative stories. This is known as the “negativity bias,” which occurs when people pay more attention to negative information than positive information. This is a well-documented psychological phenomenon, and as a result, the media tends to focus on bad news—even when the good news may be just as important.

In the context of investing and financial planning, bad news can be particularly damaging. When people hear about stock market crashes, economic downturns, and other negative events, they may become fearful and anxious about investing their money. This can lead them to make impulsive decisions, such as selling their investments at the bottom of a market cycle or avoiding the market altogether.

What the Media Doesn’t Tell You

Despite the constant barrage of bad news, investing and financial planning are still powerful tools for building long-term wealth. Here are a few things to keep in mind that usually don’t make the front-page news.

1. Investing Is a Long-Term Strategy

    Investing is not a get-rich-quick scheme; it’s a long-term strategy that requires patience and discipline. The stock market can be volatile in the short term, and it’s not uncommon for there to be periods of losses, slow growth, and even recessions. Over the long term, however, the stock market has historically provided strong returns for investors. For example, the 100-year annual average return of the S&P 500 Index is 10.345%. That’s pretty impressive considering the economic volatility the market has experienced over the last 100 years! 

    Just remember that panic selling at the whims of bad news from the media is a quick way to miss out on the potential upside that comes from down markets. While there will always be short-term fluctuations, over the long term, investing in the stock market has proven to be a reliable way to build wealth as long as you are investing in a way that makes sense for your unique risk tolerance and time horizon.

    2. Diversification Is Key

    One of the best ways to manage risk in your investment portfolio is through diversification. By investing in a mix of stocks, bonds, and other assets, you can spread your risk and potentially minimize losses during market downturns. Keeping your portfolio diversified is another way to avoid “fad” investments or trends that may be overly hyped by the media. 

    For example, if the media is reporting on a new technology that is poised to revolutionize an industry (or a recent poor performer they think you should sell), investors may rush to either buy or sell that one company. But if the media’s predictions don’t come to pass, investors may suffer significant losses or miss out on significant gains. By diversifying your investments across different sectors and asset classes, you can avoid becoming overly focused on a single trend or fad and reduce the risk in your portfolio.

    3. Financial Planning Can Help You Reach Your Goals

    Financial planning is about more than just investing. It’s about setting clear financial goals and creating a plan to achieve them. I help my clients assess their current financial situation, identify areas for improvement, and create a plan that takes into account their  unique circumstances and goals.

    Financial planning is a critical tool for working toward your long-term financial goals, and it can provide a helpful road map in the face of the constant onslaught of negative news and hype that the media often focuses on. By creating a comprehensive financial plan, you can establish a guide for achieving your goals—regardless of what’s happening in the news or the markets.

    A well-crafted financial plan considers factors such as your income, expenses, savings, investments, and debt, and helps you develop a strategy for pursuing your long-term financial goals and avoid making impulsive investment decisions. Talking about the benefits of financial planning may not generate as many views as talking about the latest financial crisis, but it is a great way to take control of your financial future and make progress toward your goals, even in a “bad news sells” environment.

    4. You Can’t Time the Market

    The media would have you believe that if only you had been more informed, you would have been able to avoid the losses in your portfolio. If only you listened to more commentators, read more magazines, or listened to the latest financial podcast, you would be able to successfully time the market. But what the media won’t tell you is that you can’t time the market because no one can. Buying and selling investments based on short-term market fluctuations is a losing game. No one can consistently predict what the market will do—no matter how much bad news they watch. Even professional investors and fund managers, who have access to extensive research and analysis, struggle to consistently predict the moves of the market.

    Instead of trying to time the market, a more effective strategy is to focus on long-term investing and diversification. By investing in a diversified portfolio of assets, you can reduce risk and maximize returns over the long run. And by staying committed to your investment strategy through market ups and downs, you can avoid the temptation to make impulsive decisions based on short-term market fluctuations.

    How I Can Help

    While bad news may lure attention, you have the power to rise above its influence. At Rand Financial Planning, I remind my clients that disciplined investing and a robust financial plan are the cornerstones of a prosperous future. My commitment lies in guiding them through the maze of media hype to steer clear of common investing pitfalls.

    By embracing a long-term perspective, we can chart a course toward your financial goals and forge a bright path for you and your loved ones. If you haven’t yet enlisted the support of a dedicated advisor, I invite you to take the leap and reach out. Schedule a 20-minute introductory call or reach out to me at 908-895-2406 or marge@randfinancialplanning.com to see if I’m the right fit to help you on your journey. Together, we can build a solid foundation for your financial success.

    About Marge

    Marjorie Rand is founder and financial advisor at Rand Financial Planning, a comprehensive, fee-only, fiduciary financial planning firm. Marge specializes in helping her clients plan for a secure retirement and navigate life’s many transitions through customized, tax-efficient retirement planning. She is passionate about empowering her clients to make the best financial decisions for their life and being by their side no matter what life throws at them. Marjorie spent many years as a CPA, specializing in estates, before founding Rand Financial Planning so she could be a go-to source for all her clients’ financial needs and help them avoid costly mistakes. She has a bachelor’s degree in accounting from Rutgers University and a Master of Science in Taxation from Fairleigh Dickinson University, along with the Retirement Income Certified Professional® (RICP®) and CERTIFIED FINANCIAL PLANNER™ certifications. When she’s not working, Marge enjoys boating, horseback riding, traveling, and hiking with her husband and her dog, Rangeley. To learn more about Marjorie, connect with her on LinkedIn.

    Get Started