This material is for informational purposes only and not to be construed as individual advice. Past performance does not guarantee future results and investing during any market cycle poses risks including the loss of principal. Investors must consider their risk tolerance and investment objectives to stay invested during down markets.
Investing during market volatility can belike driving during a Colorado winter storm. Your best plan of action is to focus on what you can control and keep progressing toward your destination.
And as the markets have turned a little blustery at the beginning of 2022, you might think of your financial plan as the GPS system that you can rely on to keep you on track, even when it’s tough to see the path forward.
Here are five aspects of your financial plan that we recommend focusing on as we weather this storm… and prepare for the next one:
1. Your Spending: The single biggest influence on the success of your financial plan has nothing to do with the markets. It’s how you manage your cashflow. As simple as it sounds, age-old advice like “live within your means” really does provide a solid blueprint for building wealth and enduring market volatility. If you don’t currently track your cashflow, the start of the year is a great time to begin. And with modern financial tools, this has never been easier. Pay special attention to any recurring charges that you barely used in the past year, like streaming services, magazine or digital subscriptions or club memberships.
2. Your Debt: Are your credit card bills for the month a little higher than average? That’s not unusual right after the holidays. Hopefully, you planned your gift-giving and travel and executed your plan. If not, review your new cashflow plan and look for ways to pay down those and other household debts rather than kicking the can—and the growing interest payments—into next month. Whether the market is up or down when your next statement rolls around, any charges you don’t pay off this month are going to be waiting for you, plus interest.
3. Your (automated) Plan: Making important financial decisions about investing (or not) when the market is slumping can be very nerve-wracking. In part, that’s because trying to time the market is essentially impossible. A much more dependable strategy is to make automatic contributions to your investment and savings accounts every month. We can adjust how those contributions are used as we analyze various options for rebalancing, diversifying and growing your portfolio, based on your long-term goals.
4. Your Mobile Phone: Technology allows us to be more transparent with our clients and keep them involved in the planning process throughout the year. But just because you can check your account balances at all hours doesn’t mean that you should. Likewise, constantly refreshing your social media and news feeds for the latest financial info is only going to make normal market jitters feel like an earthquake. According to a study by Charles Schwab from 2000–2019, declines of at least 10 percent occurred in 11 years. Annual returns in six of those years were positive, with an average gain of approximately 6 percent.
In other words, market declines are rarely cause for alarm; they’re just a part of investing. And while past performance is no guarantee of future returns, what goes down tends to go back up, especially when you zoom out and take in your full financial planning timeline.
5. Your $Lifeline: Our $Lifeline is an interactive digital tool that we use to monitor our client’s situation and plan for future transitions with over 60 types of life events to consider, such as retirement, moving, college, marriages, etc. A solid financial plan shouldn’t just boost savings to build wealth. It should help you live your best possible life at every stage of it. And as that vision of a best life changes, your plan should be able to change with it, regardless of what’s going on in the markets.
Call us up and let’s schedule a review of your $Lifeline. Rather than worry about what may or may not happen on Wall Street tomorrow, let’s discuss the life transitions you know are coming, the goals you want to achieve, and how our Life-Centered Planning process can help prepare you for the next unexpected blip on your radar.
Can We Help You? One common wish we hear from people is their desire to finally get financially organized and optimize their family finances to support living their best lives. Everyone wants to feel financially prepared for life’s transitions, both the planned ones (homeownership, starting a family, college funding, weddings, vacation homes and a dream retirement) as well as the unplanned transitions. Many people have good ideas about what they need to do, but could use some expert help to confidently move forward and fully commit to executing their plans consistently.
We offer an introductory two-meeting financial planning process at no charge to allow you to get to know us better, start to get organized and put together a plan of action. Go to oncehub.com/StewardshipColorado and schedule a virtual or face-to-face meeting to get started on your journey, or give us a call in the office at 303.500.1931.
Sean Wood is an Investment Advisor Representative offering Financial Planning, Investment Advisory and Insurance Services through Stewardship Advisory Group, LLC; an SEC Registered Investment Advisor. Securities offered through United Planners Financial Services, a Limited Partnership, Member FINRA, SIPC. Stewardship Advisory Group, LLC, Stewardship Colorado, LLC and United Planners Financial Services are not affiliated companies.