We Plan for a Reason
We’re still in the early stages of understanding how the coronavirus outbreak will affect global health care and economics for the rest of the year. However, when we look at your most recent financial plan, we can see events that we’ve been anticipating for quite some time: children heading off to university, home upgrades, holidays, and, of course, your own retirement.
Here’s why guiding you and your family through these life transitions is still the central focus of our planning, even during a significant bout of market volatility.
1. The big picture is always brighter.
Nobody could have predicted that a virus outbreak would disrupt global. But market history did tell us that the record-breaking bull market of 2009-2019 wasn’t going to last forever. What goes up eventually comes down.
The further you pull back when you’re looking at market returns, the smaller today’s volatility looks, especially in comparison to big life transitions plotted on a 30 or 40-year financial plan. Continuing to work towards those events we can see coming is a much more effective strategy than trying to predict the next natural disaster, the next market downturn, or the next prime minister or president.
2. You have options.
While major market volatility is never about just one thing, the coronavirus is making it hard for companies around the world to buy raw materials from China and sell to Chinese customers. Stocks in the energy, travel, technology, and consumer goods sectors have been hit especially hard.
Your portfolio is not overly invested in any one company or any one sector. Spreading out your assets across a wide variety of investments – including more stable bonds and cash savings – provides some options during volatility. Diversification gives us the means to scout for rebalancing opportunities when prices are low. It also provides reserves that we can tap if you need a little extra help weathering market fluctuations.
What’s going to guide the decisions we make during this market correction, and the next one? How are we going to decide which levers, if any, to pull, and which to leave alone?
3. Following your financial plan.
We can’t plan for the next significant market shakeup. What we can do is use the tools at our disposal to keep you and your family on track to navigate your financial plan transitions and achieve your financial goals, no matter what’s going on outside of your home.
That’s why there’s no “one-size-fits-all” answer when you wonder what you should do during a moment like this. The millennial who just started working and investing is at a very different point on his financial journey than the business owner eying retirement in the next five years. The couple planning to start their own business has different financial needs than the couple with three smart children all angling for a university place. And the retiree planning to golf her way across the country probably doesn’t have the same concerns as the retiree whose husband is experiencing ongoing health problems.
These scenarios all require their own unique, personalized plans. Some people will make the most progress towards their goals by sticking to their current saving and investing strategies, even as the markets are unsettled. Others might need to increase allocations to their cash reserves. And still others might look for “buy low” opportunities that will pay off in the long run. In each case, the client’s financial plan is our guide, not today’s headlines.
We understand that volatility can be worrying, especially if you’re nearing retirement or newly retired. If you’d like to review your most recent financial plan and hear a little more about our current market perspective, make an appointment to visit our offices. Whether news is good, bad, or somewhere in between, you can rely on our process to keep your best interests first and your life goals in perspective.