Are you investing or speculating?

The economic ocean in the United States has been clear and calm for the last decade. Cheap lending rates made some bad stocks seem good. They also brought in a lot of new money into other investments like real estate and cryptocurrency. But with the Fed raising interest rates, the tide is pulling back quickly. And many companies, real estate markets, and cryptocurrencies have, to paraphrase Warren Buffett, been swimming naked.

If you have money invested in any of these areas right now, chances are the ride has become painful lately. But it’s important to never waste a perfectly good crisis. There are plenty of lessons to be learned from this dip in the market. The biggest lesson to learn is whether you’ve been investing or speculating.

Here’s how to tell and what to do about it.

Investors don’t panic. Speculators do.

Investment returns in the past ten years have skyrocketed. It was easy to follow the crowd and make money without doing much research. If you are watching the bottom fall out of an investment, you may be tempted to sell and cut your losses because you don’t understand why you invested in the first place.

That’s the first sign you fell into the speculation trap. Because the difference between an investor and a speculator is really just knowledge. If you invested in a solid real estate market or bought stock in a company you’ve studied closely, you know to hang on to your investment.

In fact, you may even double down on it, knowing the investment’s foundation is solid and it’s on sale. Speculators don’t do that because they don’t understand what is happening beneath the surface. Instead, they simply buy something because it is popular with the crowd. In heady economic times, it’s easy to succumb to speculation. Don’t worry. Here’s what to do.

Look at your timeline

How soon do you need the money you’ve invested? If you are several years away from retirement, time may be on your side. Of course, there are no guarantees, but historically, investments like stocks and real estate bounce back from dips in value and grow even more.

But not every investment is the same. Depending on what your money is in and how long your timeline is, it may be wise to get some extra insight.

Seek help from a financial advisor

We all need help from time to time. Hiring a financial advisor can help you learn more about your current investments and help you make better ones in the future. But be aware not all financial advisors are the same.

Only fiduciary advisors are required to provide you with the best possible course of action for your investments. However, others can (and do) sell financial products that may benefit them more than you. But the trail of help doesn’t end with a fiduciary financial advisor. You should also consider the next step.

Talk to your CPA

Your CPA can dig even deeper into your finances and provide insight into how your investments affect your bottom line. For example, selling a losing investment might help you trim your end-of-year tax bill.

The last decade made it easy for people to speculate instead of invest. But that doesn’t mean you can’t learn from past lessons and come out a better investor on the other side.