Money noise is everywhere around us. On TV, online, advertisements, billboards, pop-ups, etc. Money noise is something that needs to be ignored and tuned out.
What is Money Noise?
Money noise is the daily chatter we hear about money. Such as:
- The next market crash
- Why money is more of a struggle for us than our parents
- The unfairness of high home prices
- Inflation, inflation, inflation
Money noise is the headlines that grab the most attention and want to make the reader or viewer consume more.
Where Does Money Noise Come From?
Money noise comes from everywhere. Media, advertising, online forums, co-workers, family, friends, etc. It’s usually the hot topics of the day and in subjects likely to raise the most emotion and passion like inflation, wages not keeping up with housing prices, etc.
Who Listens to Money Noise?
Everyone is susceptible to money noise. We’re all human and it’s easy to fall into media, gossip, sensationalism, etc. Some people listen more than others, and there are time periods in life where people get more sucked in than they normally do.
Is There Any Truth to Money Noise?
Yes and no here. The big headlines grab the most attention so keep that in mind the next time you see the massive headlines like: “Younger generations have less money than their parents.”
Reasons to Tune out Money Noise
There are a lot of reasons to tune out money noise, the rest of this post will get into the specifics.
Number 1: Sensationalism
The media’s job is to get viewers. The big headlines are the ones that are going to attract the most viewers. Headlines like:
- The stock market is going down this week, pull your money out immediately
- The real estate bubble is officially here
- Get your money back into stocks now before it’s too late
These are headlines that people are going to read, but they offer very little value. For an investor who is going to keep their money in the market for the next 20 years, does it really matter that the market might dip this week?
Or for a person who plans on keeping their house for the next 15 years, will it make one bit of difference if the real estate market goes up or down this month?
Related:
- Investing is Not Supposed to Be Immediately Exciting
- Investing: It Comes Down to Financial Habits and Consistency
Number 2: Doesn’t Align With Your Goals
Money noise doesn’t align with your goals, especially the long-term ones. Long-term goals require planning, consistent dedication, and time. Just doing a few basic things every day will bring you closer to your goals over a long period of time.
Money noise almost always involves the short-term. While the short-term can be temporarily blissful or painful, it usually has little bearing to the long-term.
Even a big event like a 30 percent stock market crash will historically stabilize over the long-term. Of course keeping in mind that past performance may not be indicative of future results.
Investors who kept their money in the market in the Great Recession benefitted tremendously in the following years as the market recovered and greatly exceeded any losses from 2008.
Make sure you are clear with your goals, including the timeframes. That clarity will help you navigate temporarily choppy waters until things start to smooth out.
Number 3: Fear Mongering
Money noise is usually rooted in fear mongering.
- What if I lose it all?
- Will my portfolio ever recover if the price of real estate drops?
- Is it possible that a stock market crash will wipe out my entire life savings?
Mark Twain wrote “I’ve had a lot of worries in my life, most of which never happened.” Things are going to happen now and then but the majority of things reported on the news or that your friends are worried about will never happen.
Number 4: Takes You Off Course
If you listen to the money noise it can easily take you off course, which comes in the form of:
- Listening to bad advice
- Panic selling or buying
- Changing a long-term strategy that’s working
It feels good to take action. So when we listen to the noise and take some kind of action it feels like we’re doing something right. However, the opposite is usually true.
It might feel good to pull money out of the market after a down week but that’s actually buying high and selling low. So it’s a really bad strategy that will take you off course.
While leaving your money in the market feels bad, when in reality it’s a more effective long-term strategy.
Number 5: Waste of Time
99.9 percent of the time, listening to money noise is a waste of time. It crosses the line from information to infotainment.
Let’s use someone with the strategy of long-term holding stocks and real estate as an example. Say this person is 30 years old and plans on holding her investments for the next twenty to thirty years, and is currently in year five of that plan.
If the markets drop in the next couple months, she shouldn’t be panic selling because her plan is to long-term hold. It really doesn’t matter to her if the markets drop, other than if she decides to buy when the assets are on sale.
Since she’s not going to be selling based off of what happened this week, there’s not really a need for her to be watching shows or news about the market dips this week.
She isn’t going to take any action off that news so unless she’s watching for entertainment–there’s very little informational purpose behind her watching.
Number 6: Serves as an Excuse
For new investors especially, it’s easy to find excuses to stop investing or never start in the first place. Listening to money noise can amplify those excuses. Imagine someone just getting started out, on the fence about investing.
The market drops right around this time and there’s some panic in the media and from family members. Is this new investor really going to begin their investment journey now? Or are they going to start making excuses like:
- “Now doesn’t seem like a good time”
- “I’ll wait until the market starts to go back up”
- “When interest rates go down I’ll invest in my first property”
It’s really easy to listen to the noise and use it as an excuse to not take action. This is where people would be better off just creating a long-term plan and ignoring the other stuff.
Conclusion
There are a lot of distractions in life. Texts, emails, DM’s, ads, friends asking for favors, etc. Sometimes the distractions seem never-ending.
Just like all these things listed above, money noise is also a distraction. There’s an oversaturation of information and news channels, blogs, ads, podcasts, etc. vying for your attention with big financial headlines. These can all become very distracting if you allow them to be.
So be aware of the money noise and distractions, and protect your time and sanity.
What other kind of money noise do you hear on a daily basis?
