Suze Orman Says to Ignore the Stock Market and Focus on This Instead

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It’s something that could impact you more in the near term.

Key points

  • Many people’s stock portfolios are down since the start of the year.
  • Financial expert Suze Orman says worrying about sinking 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 the stock market is having a pretty miserable year. Major indexes like the Nasdaq and S&P 500 are down substantially since the start of 2022, and many investors are seeing major losses when they log into their brokerage accounts.

But financial expert Suze Orman thinks consumers shouldn’t fixate 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 soar

Right now, a lot of people are looking at on-screen losses in their investment portfolios. And while that may be upsetting and scary, it’s also not a situation any individual can change.

In fact, the best advice for riding out a stock market downturn is to sit back, leave your portfolio untouched, and wait for it to recover. But checking your (diminishing) balance every day is really not 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 since the start of the year, and it’s likely to get even more expensive as 2022 moves along.

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 being so aggressive boils down to an effort to tame inflation.

If borrowing gets more expensive, consumers will, at some point, have to reduce their spending, at least within the realm of non-essentials. And once they do, it’ll give supply chains a chance to catch up to demand. Once we get there, the price of everyday goods should start to come down.

But while the Fed’s intentions may be good, the reality is that borrowing is getting increasingly expensive. Orman insists that consumers should assess their options if they’re looking to borrow in the near term and lock in loans before interest rates climb.

At the same time, those with variable interest loans should really make an effort to start paying them down — before they get more expensive. That means that borrowers who owe money on credit cards or a HELOC should do their best to chip away at their existing balances.

Don’t focus on sinking stock values

The stock market may be causing a lot of people a world of stress right now, but fixating on that isn’t going to 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 tempted you might be to panic-sell stocks and lock in losses as a result.

Rather than do that, take the time to assess your current loans and borrowing needs. Interest rates are likely to keep going up in the near term, and the last thing you want is to get stuck paying more than what you can afford.

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