Garbage In, Garbage Out: How Your Inputs Shape Your Financial Mindset

Are there any phrases you grew up hearing that now echo in your mind as an adult?

One of mine is my mom’s voice saying, ‘Garbage in, Garbage out.’ Admittedly, my teenage self, pictured below, often responded with an eye roll because this meant I wouldn’t be watching whatever TV show or movie I had in mind. As an adult, this phrase now echoes in my mind as I choose the inputs I allow into my life, whether it’s news, social media, and ultimately, who I surround myself with and how I spend my time.

In the personal finance world, two clients could be in the exact same financial situation, but one watches the financial news every day, and the other spends their time doing something unplugged from media. They will have drastically different experiences investing. I’m not suggesting that anyone burrows their head in the sand, but I am suggesting that we all take stock of what inputs we choose to add to our daily lives. How are they serving us? How could we improve them?

Take the election, for example. It would be easy to say that if X, Y, or Z particular outcome happens, it would be detrimental to the stock market. However, the evidence shows no correlation between any party being in office and stock market returns. The chart below shows that even when you look at election months specifically, returns have been well dispersed throughout the range of outcomes, with no pattern based on which party won the presidency.

Amelia Earhart, the first woman to fly solo across the Atlantic Ocean, said, “The time to worry is three months before a flight. Decide then whether or not the goal is worth the risks involved. If it is, stop worrying. To worry is to add another hazard.”

I can’t overstate how important this is for an investment strategy. Make sure your plan is in order now. Flesh out your concerns, align your investment decisions with the life you want to live, ensure the risk you are taking is well aligned with your goals, and be committed to stick with your plan. Reevaluate it as your goals change, not when the noise of the news gets loud. Rather than worry as we experience normal volatility throughout the election, you’ll be able to tune out the news, and spend your time fishing, cooking, traveling, reading, or whatever you enjoy because you’ll know you already have a plan in place. We don’t need to add another hazard with worry.

Whether it’s worry, election news, or any source of negativity, I hope thinking about how the phrase ‘garbage in, garbage out’ can help us all take inventory of the inputs filling our lives.

What phrase did you grow up hearing from your parents and how has it impacted your life?

Hannah Whatley, CFP®, AIF® is an Advisor with Rather & Kittrell.