Stock Market

Top 6 Financial Alternatives to Watching the Stock Market

If it’s up, watching the stock market can lead to false confidence, bubbles, and castles in the air. Maybe even worse though, if it is down (as it currently is), watching the stock market can lead you to sell while the market is low. Both of these actions are bad for your financial health and wealth.

Why then is it just so dang tempting to constantly check and check the stock market?

I don’t know the exact reason why. But, especially recently, the stock market has become gamified. This only heightens the experience in which constant watching gives us bursts of dopamine when we see our investments go up.

The problem is that these bursts are short lived. So, the more we watch, the more our body gets used to these short dopamine hits. Then we start to need them. So, we chase them…even if it hurts our finances.

Why shouldn’t we be watching the stock market?

The answer is because you should be investing passively in the overall stock market. Remember, by investing in the overall stock market over the long term, we invest in the overall ingenuity of humankind and the overall U.S. and/or world economy. That’s a safer bet than trying to time the market or pick individual stock winners (impossible…remember?).

We can use this more positive approach by investing in low-cost, broadly-diversified index funds. In fact, here are five concrete reasons that index fund investing in better than active stock picking.

So, if we shouldn’t be watching the stock market, what should we be doing instead?

1. Review Your Financial Plan

Whenever I am tempted to look at the stock market or adjust my investments, I just review my written financial plan.

My wife, Selenid, and I wrote our financial plan without emotion. We set our financial goals and crafted a plan to reach them. This plan then became our treasure map…if we just follow it, we know we will reach financial freedom.

It’s extra helpful to remember this when the market is:

  • Down and we feel like we need to get out of the market
  • Up and we feel like we can be doing more to get better returns

In reality, this is probably the most important function of a written financial plan — helping you stick to your intentions. If you don’t have a written financial plan yet, check out mine and use it as a template!

2. Make Sure You’re Saving Enough

Growing wealth and reaching financial freedom is simple — but not easy.

The basic formula for wealth building is to grow and invest the margin. The margin is what you earn minus what you spend.

In that equation, the one thing that is 100% always in your control is “what you spend.” So, it makes sense to spend some time making sure you are doing right by this variable.

For an attending physician, the minimum goal should be to save 20% of your gross (pre-tax) income. But if you can or want to do more, go for it! Selenid and I save about 40-50% of our monthly W2 income.

The best ways to review how you are doing with your savings rate are:

  • Create and review a budget (download my budget template here)
  • Map out your money flow like I did here

3. Assess Your Risk Tolerance

Your risk tolerance is equal to how well you sleep when the stock market is not doing well. You want to find an asset allocation that meets but does not exceed your risk tolerance.

If you find yourself not sleeping well in a down market, your portfolio may contain too much risk for your tolerance. Consider increasing your bond allocation. If you are sleeping well and feel you could accommodate even more risk, consider increasing your stock allocation.

But remember, you only need to increase your risk as much as necessary to reach the returns you need to achieve your financial goal. Increasing your risk beyond this doesn’t serve anything.

4. Learn About Real Estate Investing

If you are looking for an investment that you can tinker with to increase your return, real estate is a great one.

So, take some time to review these posts to help get you started!

5. Start a Side Gig

There are a ton of awesome advantages to physician side gigs:

  • Create passive income (AKA money you make while you sleep)
  • Diversify your income so that a decrease in one income stream does not create financial stress
  • Increase your income!
  • Decrease the amount of savings that you need to retire
  • Pay off your debts faster
  • Invest more
  • Utilize tax breaks to your advantages
  • Exercise your entrepreneurial muscles
  • Treat yo’ self! (Please click this link if you don’t get the reference — it’s worth it I promise!)

Rather than watching the stock market, I challenge you to start by generating just 1% of your clinical income via a side gig. It’s a great example of an undeniable way that 1% returns will make you wealthy.

There are a ton of options for physician side gigs that you can explore here.

6. Buy Something Intentionally

I want to end with this one. The concept of intentional spending means one is deliberate with the money that she or he spends. This means that any purchase is well thought out and carries an intended purpose.

My simple formula to practice intentional spending is if a purchase meets both of these criteria:

  • The purchase fits into your financial plan and
  • The joy derived from the purchase is greater than or equal to the dollar value of the purchase

…buy it!

If the purchase meets either of these criteria:

  • The purchase does not fit into your financial plan or
  • The joy derived from the purchase is less than the dollar value of the purchase

…walk away!

The reason I include this is to serve as a reminder that it is okay to spend money — so long as it is done intentionally. This means you can still reach your financial goals and the joy from the purchase is greater than the price tag.

Too often, we all (oh yes, definitely including me) can get too squirmy about spending any money. But money is just a tool to bring ourselves, loved ones, and the world joy. It’s not a bad thing to spend it on ourselves or others when done the right way.

So, maybe spend some money intentionally instead of worrying about the stock market!

And there you have it…

Investing in the stock market is a marathon, a long game. Watching the stock market on any frequent basis at best wastes our time and at worst can lead to financial mistakes.

The next time you feel the urge, I hope these tips help you the same way they have helped me. As physicians, our time is important, so let’s not waste it!

Jordan Frey, MD, is a plastic surgeon at Erie County Medical Center in Buffalo, New York, and founder of The Prudent Plastic Surgeon.

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