Steven is shortsighted. He’s been that way his whole life. Steven mostly spends what he makes. He doesn’t save a lot. He doesn’t plan for the future. Steven lives in the now.
Although Steven claims to be satisfied with where he is in life, he recognizes that he hasn’t met his full potential. He often follows the crowd. He tends to jump at his first opportunities, which aren’t usually his best opportunities. But Steven isn’t concerned too much about that.
When it comes to finances, Steven gets caught up in the news of the day. Because of his shortsightedness, he often makes the wrong money decisions and at the wrong time. Wise investors try not to be like Steven. However, even a broken clock is right twice a day.
There are 3 things shortsighted Steven is doing right today and 3 he is doing wrong.
Steven has noticed that high-yield savings accounts and CDs are paying more than they have in many years. He also sees that his checking and savings accounts at the bank aren’t paying him diddly. Steven is smart to move some of his extra cash and emergency funds into these short-term accounts.
However, Steven fails to recognize that when short-term interest rates move up, other investment options move up as well. Steven puts too much money into these short-term vehicles and ends up missing out on bigger opportunities. Steven feels good about his new CD, but by putting too much there, Steven is stepping over dollars to pick up dimes.
With the news of a possible recession on the horizon, Steven decides to cut back on spending and save a little extra. This is a wise decision. But Steven fails to notice that the interest rate on his credit card has moved up considerably. Steven is now borrowing from his future self at a much higher rate. Paying off all high-interest debt is what his future self wishes Steven would do now.
Steven sees the volatility in the markets and hears it could get worse. Steven knows that investing in volatile times can greatly work in his favor. Steven decides to contribute a little more to his retirement account. Good job, Steven.
However, Steven also knows that volatility can lead to losses in the short term. Because of this, he changes his investments in all long-term accounts to be conservative. If Steven fails to reallocate his investments at the right time, he could leave a lot of money on the table. This is a risky move Steven, and one we don’t recommend.
My best advice to Steven, and everyone else thinking about how best to financially handle the short-term, is to speak with a financial professional. We are here to help ensure you don’t miss great long-term opportunities due to shortsightedness.
