Financial Ignorance Is (Sometimes) Bliss

I am old enough to remember life pre-internet. When I began my financial journey, almost everything was analog. Bills were paid with checks. Balances were tracked in passbooks or check registers. Cash was king, and credit cards didn’t offer rewards. Budgeting and spending apps didn’t exist. Heck, spreadsheets weren’t even a thing. Stock performance was only available the next day in the newspaper, or the nightly news might give an update on whether the market went up or down that day. 

Most relevant to my thoughts this week: Statements came once per month/quarter, on paper, through the mail. If you needed balance information sooner, it involved a trip to the bank and some hassle. In other words, you didn’t keep super close tabs on your net worth back then. If you wanted information on your investments or balances, you either had to wait or work for it. In many ways you remained in the dark, which I know seems horrible to most digital natives. It turns out, though, that sometimes ignorance is bliss. 

I’m not going to argue that the digital age hasn’t been great for financial management. I’m not a technophobe who can’t acknowledge that having instant access to money, balance information, stock market updates, updated spreadsheets, and credit aren’t wonderful things. They are, and I use them every day. But when it comes to the big picture of my finances, sometimes I look back and appreciate that analog age, especially when the markets are down, as they are now. 

Why would I pine for that earlier age of inconvenience? Why wouldn’t I want to know exactly where I stand financially at any minute of any day? Because there is such a thing as information overload. We’re drowning in information and it can make us do stupid things, or at least exhaust us. 

When you’re investing and saving for the long term, whether it’s for a home or retirement, the daily ups and downs of the market don’t matter as much. It’s the long term performance of your investments/savings that matters. That’s why all good investment advice usually starts with, “Set it and forget it.” It’s also why dead people outperform active traders in the market. They aren’t reacting to every headline or trend. 

But when you have instant access to the gyrations of the market, and the click-bait news that goes along with it, it can make you a bit nuts. Down today! Up today! Market crashing! Stocks soar! Today it’s total collapse, tomorrow it’s prosperity for everyone. You forget that the soundest strategy is to just keep your head down and stay the course. 

In the “old days,” you had no choice. Unless you had access to some fancy equipment or knew a guy on Wall Street, you had to wait for stock market information. You also had to wait to find out how your investments were doing. This kept me from making a lot of foolish mistakes over the years. Because I couldn’t react instantly to every burp in the market, I stayed put and waited out the crises.

Getting a quarterly statement from your brokerage is a lot different than checking the balance every day. A quarterly statement allows you to see the long term trends of your investments, not the daily fluctuations. By the time your statement rolls in, those down days might have passed and better days returned. At the very least, you get a better sense of how your investments perform. If, for example, a fund loses ten percent on a bad day in the market, you might freak out and sell. But if you wait and see the quarterly performance, you might see that the bad day was balanced out by good days and you ended up with a gain. Or at least a much smaller loss that’s trending toward a gain in the coming months.

Generally speaking, collecting information over the long-ish term leads to sounder decisions than reacting instantly to any blip. You may still end up selling a bad investment, but at least you’ll know for sure that it was a dog and not just a bad day/week. (You’ll also avoid too many transaction fees and taxable events that could cut into your gains.) Paying less attention to your finances can actually be a good thing, particularly when the market is wild.

I’ve invested through at least seven major recessions/market crashes and hardly ever noticed that something was going on. That’s not to say that I’ve been unaware of the news, simply that I don’t let the headlines and daily ups and downs dictate my reactions. I wait for my statements and compile a few months of information before acting. By the time I’ve done that, the crisis has usually passed and I’ve weathered the storm. 

Of course, back in the “dark ages” you didn’t have to worry as much about security and ID theft. You didn’t have to worry that you’d log in one day to find your accounts empty and your data compromised. Today it’s wise to frequently check up on your accounts to make certain they are safe. 

So how can you combine the slow drip of information that’s the bedrock of successful financial management with the frequent checking that’s necessary for safety? I’ll admit that it’s a challenge. I think it might be a bit easier for those of us who grew up pre-internet because we were trained to be less reactive. Having easy access to information now doesn’t necessarily override the habits we learned earlier. I can check my balances weekly and not freak out because “wait and see” is ingrained in me. 

For those of you who struggle with information overload, you might try an information detox. Take some time away from the noise. That may mean taking a trip to a place that’s more off the grid, or simply locking your phone in a safe for a while. Turn off the TV and do something else. (Or at least put on a movie and not the financial news.) Take in information in slow, controlled doses via an actual financial newspaper or magazine, or time-limited periods on the internet. Do what you can to cut yourself off from the endless financial noise. 

When you do log into your accounts for security purpoases, be quick. Simply look for anything that looks amiss and then move on. Don’t sit there and stew over this fund and that fund, or whether your investments are “on trend.” Don’t panic over the red numbers. Save that stuff for when you review your actual statement. 

Unless you have a solid reason for tracking your net worth daily and following financial news intently, find a way to cut yourself off a bit. When everyone else is panicking and wondering if their financial plan is toast, sit back and wait. If you’ve made a solid financial plan and invested in solid funds (not speculative investments), then your best plan is to sit back and let your money do the work. You’ve built the machine, so let it work without too much interference. Go enjoy your day, instead. 

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