Suze Orman says ignore the stock market and focus on that instead

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This is something that could affect you more in the short term.


Key points

  • Many people’s stock portfolios have been declining since the start of the year.
  • Financial expert Suze Orman says worrying about plummeting portfolio values ​​isn’t a good use of anyone’s time, and there’s a more important metric to track.

At this point, it’s fair to say that the stock market is having a pretty miserable year. Major indexes like the Nasdaq and S&P 500 have fallen significantly since the start of 2022, and many investors are taking big losses when they log into their brokerage accounts.

But financial expert Suze Orman thinks consumers shouldn’t focus on the stock market right now. Instead, they should look at another factor that’s more likely to impact their finances: interest rates.

The cost of borrowing could skyrocket

Many people are staring at losses in their investment portfolios these days. And while that can be upsetting and frightening, it’s also not a situation that an individual can change.

In fact, the best advice for weathering a stock market downturn is to sit back, leave your portfolio alone, and wait for it to recover. But checking your (diminishing) balance every day really isn’t a good use of your time, Orman insists.

What is a good use of your time, on the other hand, is tracking consumer interest rates. That’s because it’s gotten more expensive to borrow year-to-date, and it’s likely to get even more expensive as 2022 progresses.

The Federal Reserve has implemented several rate hikes since the start of the year, and its most recent rate hike was the highest in 28 years. And the reason the Fed is so aggressive comes down to an effort to get inflation under control.

If borrowing becomes more expensive, consumers will at some point have to cut back on spending, at least on non-essentials. And once they do, it will give supply chains a chance to catch up with demand. Once there, the price of daily consumer goods should begin to fall.

But while the Fed’s intentions may be good, the reality is that borrowing is getting more and more expensive. Orman insists consumers should weigh their options if they are looking to borrow short term and lock in loans before interest rates rise.

At the same time, those with variable rate loans really should make an effort to start paying them off – before they get more expensive. This means borrowers who owe money on credit cards or HELOC should do their best to reduce their existing balances.

Don’t focus on falling stock values

The stock market can cause a lot of people a lot of stress right now, but focusing on it won’t be a good use of your time or mental energy. In fact, the more often you log into your brokerage account and track your balance, the more temptation you might be to panic sell stocks and lock in losses accordingly.

Rather than doing this, take the time to assess your current loans and borrowing needs. Interest rates are likely to continue to rise in the short term, and the last thing you want is to find yourself stuck paying more than you can afford.

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