By Bryan Trugman, CFPⓇ
Not knowing what’s around the corner can be scary. Billionaire and founder of Patagonia, Yvon Chouinard, said, “Fear of the unknown is the greatest fear of all.” And things in our world right now are just about as unknown as it gets. Most of us dislike this level of uncertainty—but the market dislikes it even more.
Case in point: the Dow recently experienced 8 weeks of consecutive losses this year, and the S&P 500 tallied 7 weeks of losses. (1) As a result, many economic leaders are predicting a recession in our near future. (2) We can point our fingers at many factors as the cause of our recent nail biting: rampant inflation, the Fed’s solution of increasing interest rates, and international unrest. The fact remains that we have no control over any of that.
We at Attitude Financial Advisors want to help you take a deep breath and walk you through whatever our markets decide to do—good or bad. Here’s how we’re watching over your finances and taking proactive steps to help manage your wealth.
We don’t make investment decisions based on what everyone else is doing or what’s popular in the investment industry. Whenever we make planning decisions with you and offer investment recommendations, we do it with your goals at the forefront. When the markets get shaky, we go the extra step of reviewing your objectives to make sure you’re still on track and make educated decisions that are not based on panic or emotion.
This starts from the very beginning of our relationship with you. We use conservative return numbers when analyzing the potential outcomes of your plan because we know that corrections and bear markets will come again. We also use asset allocation “buckets” that divide your wealth into short, intermediate, and long-term strategies to help you make the most of a volatile market.
And in times like this, it’s even more important to have an emergency fund or a percentage of your portfolio that is either in cash or liquid enough if you need it for unexpected circumstances. While cash investments may not provide a lot of growth, having a cash contingency fund with at least three to six month’s worth of living expenses will protect you against having to sell investments at low values to free up cash.
We Know Your Risk Tolerance
Do you know that feeling in the pit of your stomach when you make a decision that was too risky for your comfort? Our goal is to help you avoid that feeling when it comes to your investments. Before investing any of your money, we determine your risk tolerance, the amount of risk that an investor is comfortable taking or the degree of uncertainty that an investor can handle. Like most things in life, your risk tolerance may change with age, income, and financial goals. We don’t want you to lose sleep at night, so we review your risk tolerance and how much risk you can afford to take and adjust your investments over time.
We also watch over your money like a hawk, and when it’s time to get out of an investment because the risk is rising, we will contact you about adjusting your allocation.
During bear markets, it’s important to remember that investors only realize losses when they sell, so it’s critical not to sell when the market is down. When you need to access your money is an important factor in avoiding those losses. For example, if you are a decade or more away from retirement, you can likely wait out a recession or correction and benefit from the recovery. If you need access to your funds in the next five years or are within your first five years of retirement (frequently known as the “fragile decade”(3)), a recession will make more of an impact on your money and your plans.
From a practical perspective, we make sure your portfolio’s allocation is set up with your time horizon in mind. If you need money in the short term, your portfolio will hold safe investments like cash or short-term bonds. Because retirement can last decades, you still want some of your money in investments that will produce long-term growth, but your portfolio will look very different from that of a 40-year-old in the peak of their working years.
We Are Your Emotional Support System
I’m sure you’ve heard the motivational slogan “Keep calm and carry on.” These are wise words! In fact, a top investment rule is to refrain from making emotional decisions. It can be easy to get swept away emotionally when the market wreaks havoc on your finances. However, if you stay true to your investment strategy and avoid making decisions when emotions are running high, you won’t run the risk of losing even more.
It’s important to remember that bear markets have happened before—and they will happen again. As long as you’ve created a disciplined financial plan and have a trusted advisor monitoring your money, you’re doing your part to prepare. Do you have someone you can turn to when the market gets wild? We’d love to support you as we work together to help build your finances for a strong future. Reach out to me via email at email@example.com or give me a call at (516) 762-7603 to set up a consultation.
Bryan Trugman is managing partner, co-founder, and a CERTIFIED FINANCIAL PLANNER™ practitioner at Attitude Financial Advisors. With more than 13 years of experience, Bryan specializes in addressing the financial needs of new parents as they seek to realign their finances, assisting divorced individuals as they navigate an unforeseen fork in the road, and strategizing with those seeking to accrue a dependable retirement nest egg. Bryan is known for being a good listener and building strong relationships with his clients so he can help them develop a customized financial plan based on what’s important to them. He is passionate about helping his clients experience financial confidence so they can worry less and play more. Bryan has a bachelor’s degree in industrial and systems engineering with a minor in mathematics from State University of New York at Binghamton. He has served on the board of the Financial Planning Association and continues to be actively involved in the national organization. He is also a member of the Plainview-Old Bethpage Chamber of Commerce and has served as its vice president and as a board member. When he’s not working, you can find Bryan on the ballroom dance floor or engaged in a fast-paced game of doubles on the tennis court. To learn more about Bryan, connect with him on LinkedIn. Or, watch his latest webinar on: How Much Is Enough? A Surprisingly Simple Way to Calculate Your Retirement Savings Needs.
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