We cover five pillars: Financial psychology, Increasing your income, Investing, Real estate, and Entrepreneurship. It’s double-ii FIIRE.
Today, we’re diving into Pillar Three: Investing.
Pillar III | Investing
This letter “I” could very well be called the letter T right now — tariffs, trade war, and turbulence.
Tariff increases went into effect earlier this month, and the markets treated it like old news. Stock indexes were mixed.
And that’s to be expected. We’ve known since April that this on the horizon, and these policy changes have already been priced into the market.
What we don’t know are the long-term effects, but those impacts are incremental — and that story will play out over the coming months and years, rather than days or weeks.
We also know that there’s plenty of good news in the economy. The GDP is up 3 percent (partially due to reduced imports) and consumer spending is strong (even though sentiment is weak … but actions speak louder than survey responses).
The markets have priced in two Fed rate cuts over the remainder of the year, with the first cut likely when the Fed meets on September 16-17.
Home sales are at a 30-year low (great for buyers), but the expected rate cuts may help boost that volume.
And so, I’d like to suggest three other words represented by the letter T, which serve as a reminder for how to handle your portfolio.
#1: Timing the Market (Don’t)
Remember early April? The markets plummeted, and many people panicked.
There was a period of about a week or two when I was flooded with DMs, emails, and voice messages from people who were incredibly worried about their dwindling portfolio balances.
Nobody talks about that anymore.
Why? Because the markets have recovered 28 percent from their low in April. That stress is now a distant memory.
If you panic sold, you missed the recovery.
The thing about panic selling is that most people don’t announce, “Ahem. Ladies and gentlemen. Attention. Attention. I am about to panic sell. Thank you.”
That’s not what you tell yourself.
Instead, panic selling usually happens through post-hoc rationalizations.
People will say:
- “I’m getting more conservative as I get older” (even though you’re 35 and nothing about your timeline changed)
- “I want to take some profits while they’re still there” (translation: I’m scared they’ll disappear)
- “The fundamentals have changed” (code for ‘this time it’s different’)
- “I’m just rebalancing” (my friend, you rebalanced two months ago)
- “I’m moving to a more diversified strategy” (translation: I’m fleeing to cash or bonds because I’m worried)
- “I need the money sooner than I thought” (no you don’t)
The pattern is the same. It’s rational language used to justify emotional decision-making.
These rationalizations are how we give ourselves permission to panic, without admitting — to the world, or to ourselves — that’s what we’re doing.
It sounds good on the surface, but it’s masking deep-seated anxiety.
If you panic sold in early April, there’s no shame in it. Those missed gains are the cost of self-knowledge. You’ve battle-tested your risk tolerance. You’ve gained knowledge. You know how to *actually* asset allocate accordingly.
If you held steady or — better yet — bought the dip in early April, first, congratulations. Second, your real gain is also self-knowledge. You’ve tested your spot on the risk-reward spectrum.
Here’s the reality: We might be headed for a recession. That was true in early April, and it continues to be true in early August.
But even if we do go into a recession, we don’t know its severity or its duration. And recessions are not necessarily synonymous with steep or protracted market declines.
So even if we do go into a recession, there’s no need to sell. In fact, it’s often a fantastic time to buy.
#2: Timeline
The second T is about the only type of “timing” you should participate in: investing based on the timeline of your life and goals.
You’re not timing the market. You’re timing your life.
Let’s go back to the excuse that many people use when they panic: “I need the money sooner than I thought.”
This happens a lot when the markets get choppy. People suddenly decide that their 15-year time horizon has shrunk down to five. But has it really? Do you have a written plan?
Here’s the thing: if you don’t need the money for a decade or more, today’s market movement is just noise. Static. Background chatter.
Your real timeline hasn’t changed just because your stress level has.
Try this: associate a specific goal with every investment.
Is that money for a short-term goal (less than 5 years), like buying a car, travel, or a home renovation?
Is it for a medium-term goal (5-10 years) with a highly flexible date, like buying a vacation home? Or does your medium-term goal have a fixed date, like college?
Or are you not tapping that money until 2035-2040+ ?
Some accounts have clear, obvious associated goals: 401k, IRA, 529.
But there’s a decent chance you might have accounts that don’t have specific goals.
Maybe you don’t know when/how you want to tap your taxable brokerage account.
Maybe you’re in the early stages of planning a potential early retirement using the SEPP 72(t), or living a Coast FI or Barista FI lifestyle.
Maybe Roth conversion ladders (and other sophisticated techniques) have entered the chat.
Suddenly the timeline is malleable. And that makes everything feel fuzzy.
You could Coast FI into a work optional lifestyle in … 4 to 5 years. Or maybe 7 to 8 years. Or maybe 10 to 12 years.
“It depends!,” you say when asked. It depends on how lean FI / chubby FI / fat FI you want to live, and on how well the markets perform, and whether or not your equity stake in your company fully vests …
… that’s why the timeline and goals are so amorphous …
… but you don’t know how to manage investments in the context of a timeline that’s so fuzzy.
And that’s when you’re prone to panicking at the first sign of market turbulence.
You need an anchor.
Get clarity on the timeline, and the question of “What should I do with my investments?” will often answer itself.
Because once you’re clear on the timeline, then the rest is a simple matter of asset allocation.
#3: Trust (the Process)
The third T is about trusting the process you set up when you were thinking clearly.
You didn’t randomly pick your asset allocation. You didn’t throw darts at a board to choose your investment mix.
You thought about it. You researched. You considered your goals, your timeline, your risk tolerance.
You set up automatic contributions. You chose low-cost index funds. You decided on a rebalancing schedule.
That person — the calm, rational you who made those decisions– was operating with a clear head. No market stress. No daily news cycle anxiety. Just good, solid financial planning.
But when markets get volatile, we suddenly think that stressed-out version of ourselves is smarter than the person who thoughtfully designed the plan.
Spoiler alert: we’re not.
The YOU who planned this strategy was thinking about decades. The you who wants to change it is thinking about today’s headlines.
Trust the process you built. Trust the person who built it. That person was you, thinking clearly.
The whole point of having a long-term investment strategy is so you don’t have to make investment decisions when you’re emotional.
You already made them.
