March 6, 2020
Throughout history there have been down turns in the market followed by recoveries and expansive growth. While uncertainty can be scary, history has shown us that investors who are committed to their long term financial plan tend to survive the down turn and can possibly be rewarded and have their portfolios thrive. We cannot control markets but we can control our response to the markets.
In uncertain times, I find it is best to focus on what you can control and remember what is most important to you: health, happiness, family and legacy. Take a step back and look at your financial position from an airplane view and then analyze some of the details. This is a great way to gain clarity, confidence and direction for your own personal financial and investment decisions.
1. Take a deep breath and relax. Don’t make decisions based on fear. Emotional decisions generally don’t end up so well. For mental clarity, it’s best to get enough sleep, exercise, drink water and eat healthy.
2. Turn off the TV or limit your time getting account updates and watching the news. Extended periods in front of the TV can be overwhelming and cloud your decision making ability. Take that time to focus on tip #1.
3. Focus on your long term goals and strategies. Begin by looking at your financial plan from a 10,000 foot view. This higher perspective will allow you to see what’s going on in today’s global environment as a smaller part of your larger life goals and plan. Where are you on life’s timeline? Are you working, about to retire or already retired? What are your lifetime goals?
4. Review the basics. Know your numbers. What is your risk number? Is your strategy tax efficient? What are your account balances and how you are invested? At times like these, we are reminded of the importance of a diversified portfolio. Make an honest assessment of how much risk you can afford to take and still feel confident.
5. Develop a strategic withdrawal plan. If you are taking regular distributions from your portfolio, now is a good time to revisit that amount and frequency. Sequence of returns risk can be mitigated through strategic and efficient planning.
6. Review and update your budget. What expenses can you reduce if necessary? As we make more money, generally our lifestyle improves. Perhaps there are expenses which have increased without you realizing it. Remember it’s not what you make but what you keep that is important.
7. Meet with a fiduciary. If you don’t have a financial plan, and you tend to panic and make fear based decisions, I recommend that you see a Certified Financial Planner to review your financial situation and to assist with any rebalancing or reallocations if necessary. If you have a financial plan, now is the time to gather the above and review it with a fiduciary to discuss any adjustments or oversights which may need to be addressed.
Meeting with a trusted advisor to guide you through the quagmire of the daily news can bring clarity to your decision making process, may enhance portfolio performance and create added peace of mind. Reach out to have a conversation about your financial goals 352-683-7365.
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