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Emotional Damage April 28, 2014

Posted by shaferfinancial in Finance, Uncategorized.
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We spent last week down in Boston as we usually do. As most regular readers know, last year we were at the Marathon to watch a family member run. It was a very scary situation for our then 11 year old son. This year he made it clear he would not be going into Boston to watch the marathon. Pretty much the entire family felt the same way.

He will get over his fear soon. But, for now we deal with his emotional damage by spending time in Boston doing other things. After 2008-2009 many people lost their confidence in the stock market. They should have, not because of any unusual occurrence, but because it was a normal stock market occurrence. They should have developed a healthy respect for the harsh realities of how some stock market movements happen, suddenly and sharply. Just as my son should develop a healthy respect for the fact that there are bad people out there that will try to hurt people they don’t know. The result should be to create defensive positions that lower ones emotional valence about their environments.

EIULs do that for folks savings. By creating a system that doesn’t lose massive value quickly, and allows for some liquidity for getting to the savings, people’s emotions are kept in control. This allows people to go about their daily lives with a lower amount of stress and put a comfortable spin on saving for retirement. The results are predictable. People who have less stress, react more rationally. People who are not punished by penalties when they access their savings in an emergency situation are more likely to recover confidence and continue to add to their retirement savings once the emergency situation is over.

Don’t be one of those people that pushes bad thoughts out of their minds, just to have those same thoughts come back as soon as a bad event happens. Create an environment where the bad event is prepared for and dealt with rationally.



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