Growing up, my father used to tell me, "There are two important things to remember in life when a crisis hits: keep a straight head and build staying power."
I have now grown to understand these statements and respect them. Both are critical to long-term financial security for you and your family.
Stock market corrections are an inevitable part of investing. They are also the last thing any investor wants to experience. Still, they serve as a vital process in the investment cycle; and with this one particularly, a wake-up call was made.
Although we can never know when a decline might occur, how you react to such a stock market reality will play a crucial role in your long-term financial success. And, as in any crisis, you must face it head on and with a realistic view point. Most important ... remember my father's words — "keep a straight head and build staying powers."
What does it mean to keep a straight head? Assess your situation and work with it. Do your homework and remember your long-term goals.
Think back to 1973, a 45 percent decline over 23 month after the New York Times polled the experts who said the market will move "somewhat higher" in the near future. In 1974, with no optimistic prediction in site, the Dow gained 38 percent.
Why should you build staying power? Because it gives you choices. Never should investments be made with cash you must have available in the short term. If in reviewing your income, expenses should be lowered, then shave a little here and a little there. This can make a big difference over time. Spend wisely. Be conservative, not outrageous.
Preparing for the "not so good times" is essential, even during the really great times. Don't forget to always plan rationally and for the long term. Eventually, opportunities will unveil themselves to you. And, guess what? You will be able to take advantage of them like a pro…and you may be able to make money!
With a straight head, a bit of optimism, and a good dose of staying power, you may have the opportunity for a better outcome over time. The lessons you learn are valuable and develop the experience of wisdom. Financial success is defined by you, in your world which surrounds you, but is relevant for the choices you are able to make. The capability to have choices is what matters. This can be learned through studying the history of money, economics, markets and those mentors that have made smart choices.
I have found that a decision made in a vacuum seldom works over time. Great sailors adjust their sails ever so slightly when the wind shifts, those sailors are seldom unprepared for a shock of a storm. As a successful investor, be prepared for uncontrollable factors that might influence the outcome of your financial picture.
Kim Ciccarelli Kantor is president and founder of Ciccarelli Advisory Services Inc., a family owned and operated firm in Florida and New York, which provides comprehensive financial investment and estate planning services for individuals, families and businesses. Her book is "Preserving Family Wealth & Peace of Mind."
Ciccarelli Advisory Services, Inc. is at 3066 U.S. 41 N., No. 202, Naples. Phone: 239-262-6577