How to Handle a Problem Most Investors Would Love to Have

Keith Fitz-Gerald

I received an important question last week from Margaret who, at 81 years young, has a problem most members of the Total Wealth Family would love to have.

No, scratch that… a problem I am going to do my very best to make sure you have.

Here's what you need to know

Proof There's Such a Thing as Good Problems

Margaret's got a quality problem.

She's built up enough wealth to live out her life in style and wants to leave a legacy for her children and grandchildren. But, like many older investors, she's worried about a market crash and concerned she has too much money in volatile gold and silver stocks.

There are a few things to think about here.

1) "Volatile" does not necessarily mean "down."

Many investors in similar situations – and older investors, in particular – often tell me that they can't handle the volatility associated with specific stocks and are worried about a crash… yet they plow into them anyway.

What they're missing is perspective.

As we have discussed many times, the markets have an upward bias over time, which means that older investors want to be thinking about growth when it comes to leaving a legacy even though the temptation is to think about preservation.

There's no doubt that stocks go up and down, so let's get that off the table.

The single biggest mistake any investor in Margaret's shoes can make is to confuse her risk tolerance over the next few years with that of her children over the next few decades.

Simply put, the runway, for lack of a better term, is much longer for younger people, which means the best thing you can do when it comes to leaving a legacy is choose stocks that prepare them for financial takeoff, not a hard landing.

Whereas older investors in your shoes, Margaret, often fear pullbacks, corrections, and even crashes, don't forget that every one of those things is an opportunity for younger investors because volatility makes "buying low and selling high" possible.

Over the longer term that includes their lifetime.

Admittedly, this isn't easy to do for the simple reason that we like to think we know better as we get older. Our lives are no longer measured by "firsts" – our first day in school, our first kiss, our first paycheck… even our first winning trade. Stress takes over as we age, and that forces us to reinterpret things as a series of threats… to our lives, to our relationships and, of course, to our financial security.

That's why we like to think we "know better" with each passing year.

But, do we?

2) Your children and grandchildren will live in a very different world.

Many investors are stuck in the past… or at least the present.

Psychologists call this "recency bias," which is a clinical term meaning that we have a built in cognitive bias towards events that have happened r…

Keith Fitz-Gerald

About the Author

Browse Keith's articles | View Keith's research services

Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.

… Read full bio