Why and When to Re-balance Your Portfolio

The world has become disruptive in the past couple of years. Rampant inflation in the economy and rising interest rates are causing many Americans to wonder if retirement is in their future.

​One rule I live by is “never make lifetime decisions based on short-term factors.”  Let us assume you are 60 years of age and wanting to retire at age 67. Your career is going well and your savings for retirement has been maximized for the past 30 years. Based on these simple facts, you surmise that retirement would be sustainable for the remainder of your life. Then the pandemic strikes! The economy contracts! You are now feeling less confident in your plans.

​A market correction is defined as a 10% or more decline in major market indexes. Based on that definition, the U.S. experiences a correction approximately every two years (consider recently the Covid Correction). There have been twenty-eight corrections in the S&P 500 since World War II.  The average market decline during this period was 14%. One of the most important key facts to remember is that the index recovered and returned to new all-time highs within a few months to a few years. 

Typically, emotional investors create their own problems by over-correcting their portfolios. Wayne Gretsky, the Hall of Fame Hockey Player, remarked to a sports reporter asking his secret to holding the title in the National Hockey League for the most points in a season, “I skate to where the puck is going to be, not where it has been.”  In a similar approach, you should not become so emotional during market corrections that you leave the market and realize losses when patience may return your investment positions to a greater value than when the negative market change occurred.

One method of removing the emotion from your investment portfolio management is to rebalance to maintain the appropriate risk balance you desire. There are two methods of rebalancing: time and threshold. Based on our research, either method will provide comparable results which is keeping your desired risk at a certain range or level.

Rebalancing using a time approach is simply setting a periodic date to rebalance your portfolio by selling the necessary asset classes to maintain the appropriate mix for your risk tolerance. For example, on the first business day of every fourth month you will rebalance your portfolio. Simple to remember and takes a little trading to sell and buy the various securities.

Alternatively, you can rebalance using the threshold method. When a portfolio is designed based on your time horizon, risk tolerance, and cash flow objectives, you may arrive at a portfolio with 50% in equities and 50% in fixed income investments. Over time the portfolio will experience changes based on market conditions. Should the equities allocation increase to 60%, the impact will be a reduction in fixed income investments to a 40% allocation. To maintain your proper risk level in the portfolio, you might wish to sell some of your equity investments and buy fixed income investments until you arrive at the desired 50/50 allocation.

During market turmoil, it is critical to your long-term success to manage risk. If you want a portfolio analysis of your retirement assets, contact a CERTIFIED FINANCIAL PLANNERTM professional. It is always better to know where you will land before jumping!

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How To Remain Prudent During Market Cycles

What goes up must come down! Whoever authored this statement of life events and business activities should receive the award for the Most Obvious Statement. However inane the statement, it does contain a little truth when applied to our current economic cycle in the United States.

Factors such as inflation, supply chain disruption, interest rate increases, U.S. Government fiscal policies and continued underemployment in our country have caused significant volatility in the markets. It has been a literal rollercoaster for the various market indices used to measure performance of the exchanges in the U.S.

At the start of 2022, the S&P 500 Index was at 4674.77 and closed on May 6, 2022, at 4175.48. This decline of 16.26% has caused investors to worry about the future of their retirement assets. To mitigate the emotional impact of such a decline, consider past market declines and learn from the period of time after the correction. For example, by remaining calm and investing in a well-diversified portfolio, you will recover your unrealized losses in the future. If you are planning to make a large purchase during a market downturn, it may be fiscally more responsible to consider bank loans which carry a much lower rate of interest. Once the markets recover and the value of your portfolio is an unrealized gain, sell a portion of the investments to liquidate your debt.

Another measure of thriving during market cycles is to utilize noncorrelated investments that respond better to inflationary pressure. For example, real estate is a sector of the economy that maintains cash flow and value during market declines. Think about this approach to your income needs during a period of market contraction. Real estate investors continue to collect rents on a monthly, or some other predictable period, basis no matter the state of the economy. 

Of course, no investment is immune to such historic market events as the Wall Street Crash of 1929 or Black Monday in 1987. The key to facing any market disruption is to not allow emotions to control your decision making. One of my favorite quotes of Warren Buffett, “Be fearful when others are greedy and greedy when others are fearful” comes to mind during times we are currently experiencing.

Lastly, remember that you most likely took several decades to amass your retirement assets. The intention of these assets is for them to last you several decades in the future. Unless the need for capital was immediate at retirement, your portfolio will grow and contract as market conditions change. By maintaining a long-term perspective, you will be better suited to investing in positions that are below their book value and allow for a growth opportunity in the future. There are positions that are available for you to make reasonable long-term returns while the overall economy is in contraction.

Keeping perspective and maintaining a well-diversified portfolio will help you weather the storms of the economy much better than attempting market timing. Predicting markets is not an approach that serves you well. If you wish to evaluate your portfolio, contact a CERTIFIED FINANCIAL PLANNERTM professional. Worry never solved a challenge.

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The Most Valuable Investment — Family

Tomorrow, we celebrate mothers. If there is one person on the planet that plays the most critical role in our life it is our mother. The congratulatory comments I share with my mother when an honor has been awarded me, or I am recognized in any manner, is that I owe Mom an indeterminable amount of love and admiration for helping me receive this honor. Without her, I would not be here – literally! I know, this is a lame joke but so true.

The purpose of this column is to help our readers invest in themselves to enjoy a better life. One of the best returns on investments you can claim in life is building lasting and productive relationships with family. There is no definition of the perfect family. Life has a way of causing disagreements and dysfunction in our families. 

In an analogous manner, as fellow citizens in this great country, the United States of America, we should do away with all manner of political and other differences to focus on our wonderful mothers. Particularly, I wish to share a few stories of my mother’s influence in my life.

Some of my fondest memories of childhood center around my mother. Her support in all my sporting events, cheering me up when the game did not end as I had hoped and buying ice cream for the team no matter the score all impacted me in a profound manner. To this day, I attribute my love for education and my cheerful outlook toward life to my loving parents. From my earliest days of life, I can recall my mother always telling me “You can do this” or “just a little more effort and success will be yours.”  

My mother has never met two of my mentors, Jim Rohn and Zig Ziglar, but she unknowingly mirrors their approach to challenges in life. Mom has a “never say quit” attitude about challenges. Her life began in 1936 as the middle child in a very rural, poor family. She regales me with stories of picking cotton in Arizona and owning only one pair of shoes that grandmother allowed her to wear in winter months. She did not finish her high school education in the traditional sense but earned her GED later in life. In true warrior fashion, she enrolled in a community college and completed her Associates Degree!

The value I strive to bring to those I meet is one of positivity. Our world requires that each of us bring our best self to help each other achieve greatness on our terms. Although I earned a few corrective actions from my parents in life (there were many more actions they did not know about!) their love and dedication to us, their children, has never waned. 

It is with great humility that I share one last fact with you – I am the luckiest man on the planet to be born in the United States of America to a dedicated, supportive and positive mother as a role model to life. Of course, my father is a great man, and I will share his contributions to my life with you next month in this column.  

Wealth is not all about money and assets. True wealth is defined as those things in life that money cannot buy, and death cannot take away. If you wish to create a plan for your future, to include instilling your familial beliefs as well as financial wealth, in the process of legacy building for your children, please contact a CERTIFIED FINANCIAL PLANNERTM professional. Leave your family the values that never fade with time. 

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Balance In All Things Is Success

You may have heard that life is a marathon and not a sprint. That statement is particularly true when it comes to saving for your future. Many people have found themselves ensnared in debt and living beyond their means to the point it requires them to continue their career longer than desired.

Like any good track coach would advise an elite runner, the focus should be straight ahead and the pace consistent. When approaching the finish line (retirement) kick it in to finish strong! One of the most effective methods of saving for retirement is to maximize the amount of time you have available in your life. Starting early allows you to save smaller amounts each year while compound interest does the heavy lifting.

To illustrate the previous point, let me introduce you to Ronald Read. His story is so inspiring. Mr. Read didn’t earn a significant amount of money in salary as a janitor but was disciplined in his spending. His lifestyle is not for everyone but serves as an excellent example to those who earn far more in annual income and can’t accumulate the level of wealth of this WWII veteran.

Mr. Read was frugal beyond anyone’s expectation. His life of austerity is not for everyone. He drove a second-hand car, used safety pins to hold his coat together and cut his own firewood well into his 90s. The catalyst to his success was that he was a knowledgeable investor and exhibited emotional control to hold his stocks during market contractions. Most of his individual securities were held for decades as discovered at his death.

No one suspected the lowly janitor to amass a fortune by the time of his death. His generosity benefited his local hospital and public library. The total amount of wealth contributed to these two organizations was $6,000,000! 

How did this happen? By remaining calm during tumultuous market corrections and retaining his investments for the long-term, Mr. Read benefitted from years of growth on blue chip companies that paid good dividends. This approach combined with a lifestyle in which he seldom incurred debt and always “paid himself first”, created a multimillionaire on a very limited income.

This is the American Dream for many of us. Work hard, save money, make sound decisions and you may experience a similar story for your family to regale in the community. It is very admirable to leave a nice bequest to charity. However, I believe it is balance in your life that truly brings you happiness for a lifetime. By living within your means and saving for your future, you can enjoy family vacations, nice things and send your children to college. Balance is the ultimate key to a lifetime of cash flow and enjoyment.

If your family wishes to create its future in a manner that is balanced, contact a CERTIFIED FINANCIAL PLANNERTM professional. The key is to start early, keep a consistent pace and focus your eyes on the future ahead of you, it will be here before you know it. See you on the jogging trail!

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Staying Focused is the Key

Ask any all-star athlete the secret to their success and they will tell you – focus. This past weekend at The Masters in Augusta, Georgia, Tiger Woods initiated his triumphant return to professional golf. During his post-round interview after he finished the tournament, Woods used the word “focus” several times to describe to the interviewer what his secret was in returning to competitive golf after such a devastating automobile accident.

Life is similar to a sport, perhaps a marathon race. It is difficult for many of us to see the long-term impact of initiating and maintaining a savings plan from age 20 to age 67. As my dad often used the “stick and carrot” analogy, the younger investors can’t taste the carrot due to the overwhelming length of the stick. For those that can maintain the zeal for living a life prepared for unexpected instances that require substantial resources, success is often the outcome.

Younger people look at me with disbelief when I explain the power of compounding to them. To paint the picture in a manner that “shortens the stick and sweetens the carrot”, I ask them to look at their investment account every six months. One of the first statements they utter is “Wow! Look how much I saved and I didn’t miss the money.” Albert Einstein, the great physicist, was credited with a quote about compound interest: “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”

To create a system of focus pertaining to your finances, it is critical that you automate as much of the process as possible. For example, if you are participant in an employer-provided retirement plan, your investment funds will be automatically deferred from your paycheck and invested in the manner you direct your employer. This is a simple method of automating your savings and also receiving consistency in the process.

If you work in a company that does not provide an employer plan, you can accomplish the same automation with an ACH (automated clearing house) election. This process works very similarly to that of your employer election. By filing a form with your wealth advisor to transfer a certain amount of money at a fixed frequency, you will not be required to physically write a check, prepare an envelope or worry about finding a stamp to mail the deposit. Your life will be much simpler from an investment standpoint and you can worry about things such as fishing, golf or running.

If you wish to automate your savings for retirement, it is critical that you have a plan in place to accomplish your goals. See the advice and create a plan for your future by visiting a CERTIFIED FINANCIAL PLANNERTM professional. Take control of your future and you will enjoy less stress in life. See you on the pickleball court!

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Know Where You Will Land Before You Jump

What if you purchased an investment that the insurance salesman informed you would give you annual payments for your lifetime? What if you were 83 years of age? The reasons for the preceding questions are due to the factual case of a client that came to our office.

One of our retiree clients began asking questions about an insurance product that paid annual lifetime payments and earned an unusually high rate of return the first two years. Puzzled by the initiation of the conversation on this topic, I asked her why she was interested in this product. What transpired was a conversation that both shocked and irritated me.

The client’s mother is a widow and 83 years of age. She began to regale me with a story of her mother and a friend attending a free luncheon where they were introduced with a story about “guarantees” and “lifetime income”. Of course, with no understanding of what she was buying, her mother was informed by the salesperson, or she understood him to state the fact, that her money was insured.

We asked the daughter to bring her mother to our office to personally discuss the matter and confirm the facts of the purchased investment. After a few minutes of her mother describing the event and “nice young man” that spoke, she provided a copy of the contract for our review. Quickly I noticed the product came with a 12-year surrender period. Keep in mind, the lady was 83 at date of issue. 

Complicating matters was that she had placed all her liquid cash except for $50,000 in this investment. After our discussion, she was quite upset and acknowledged that she and her friend had made a mistake buying the long-term, illiquid product.

The story doesn’t end with our conversation. Due to the recent purchase of the product, we informed her that she was in her 20-day Free Look Period and that she could cancel the product purchase with proper notice given the insurance company. We assisted her in the cancellation process, and she thanked us for helping her understand the investment more comprehensively.

These types of incidents occur too frequently to the elderly in our communities. Without knowledge of the products in which money may be invested, the elderly are prime targets for unscrupulous salespeople.

I should point out that the person selling the long-term investment to the elderly lady had a proper insurance license and wasn’t a CERTIFIED FINANCIAL PLANNERTM professional. 

The lesson learned is that nothing in life is free. This has been borne out from my father’s teachings when I was a little boy. There is always someone paying the bill for the service or product you supposedly receive for free.

Want to know how the story ended? The elderly lady received her sizeable amount of investment back and was provided a plan for her future that addressed cash flow, estate, and tax matters to empower her to make good decisions. She has a reasonable amount of reserve for potential emergencies and no longer eats free meals offered her by strangers. So, as the storybook always reports, all lived happily ever after.

Investing requires understanding, education, and awareness about the strategies you employ for your future. Don’t invest your money in sophisticated strategies that are incomprehensible. Consistent investing over a period of time in a fully diversified portfolio that is easily monitored and rebalanced gives you greater comfort and confidence in your future. Seek out the advice of a CERTIFIED FINANCIAL PLANNERTM professional to help you understand your investment portfolio. One of my favorite quotes of Abraham Lincoln applies in this situation: “The best way to predict your future is to create it.”

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How Geopolitical Risks Affect the Markets

Today, we live in a global economy. Although appearing insulated to the disagreements between countries on the other side of the globe, U.S. markets are negatively impacted nonetheless. How could a political conflict between Taiwan and China create market disruption in the U.S.? This type of risk to markets is called Geopolitical Risk.

One of the most critical factors of any economy is the ability to maintain a steady flow of capital through the production and sale of goods and services to respective markets. When this flow becomes interrupted by governmental policy, military action or social interaction, markets become concerned that buyers and sellers of these goods can continue to make profits, hire employees, obtain raw materials, etc. Recently, political relations deteriorated between China and the United States. Differences in economic goals and outcomes, fair treatment of workers and use of natural resources, or the lack thereof, can impact the flow of goods and services in a significant manner.

Diversification of a portfolio requires far more than simply allocating your assets among different styles of investments such as large capitalization and small capitalization companies. To properly diversify your portfolio, it is critical you analyze the inherent risk in foreign markets including developed and emerging countries. An investor would be required to understand and accept greater risk involved with investing in an emerging market country where transparency and lack of efficient trading occurs more so than a sophisticated and developed efficient trading country.

Based on the World Economic Forum’s Global Risks Report 2020, economic confrontation between major powers is the most concerning risk for 2020. Most recently, the invasion of Ukraine by the Russian Federation presents significant attributes of market disruption. The markets for fertilizers and other natural resources located in Ukraine, in substantial quantities, have been disrupted in the past month. Fertilizer prices rose due to continued high demand and supplies were lowered by the political disruption caused by war.

The pandemic caused by Covid-19 continues to disrupt the free flow of goods from manufacturers in China and the Far East destined for the United States. How does the pandemic affect the flow of goods and materials? In China, a zero-tolerance policy exists in the manufacturing sector. This simply means that the discovery of one case of Covid-19 diagnosed in a worker requires the entire closure of the facility. Let’s assume a plant in China manufactures automobile replacement parts. Demand for these parts remains very high in the U.S. economy. By closing the plant for a period of a week (or for a month as done during the Chinese New Year) will generate less supply for consumers and greater demand for the parts. The result of this imbalance between demand and supply is inflation.

Investing requires an understanding of the functions of foreign and domestic markets, taxation of international imported goods and the impact of geopolitical risks. Most individuals feel ill equipped to make such investing decisions or where to research the matter. Seek out the advice of a CERTIFIED FINANCIAL PLANNERTM professional to help you analyze the risk in your portfolio and provide you opportunities and guidance to reach your lifetime goals. Matt Haig said it best, “Never underestimate the big importance of small things.”

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Timing is Everything

Time is the one facet we humans can’t command in life. You may attempt to manage it, schedule it or even slow it down but you can never make time work to your will and wishes. In that similar regard, the Internal Revenue Code, which is the law guiding the assessment, reporting and payment of various types of taxes in the United States, works in a similar manner when it comes to retirement contributions to Individual Retirement Accounts (IRA).

The law allows an individual with earned income, and meets other criteria, to contribute to an IRA annually. However, there is no ability by the taxpayer to stretch the period for contributions beyond the original due date of their individual income tax return. Typically, filers of Form 1040, the U.S. Individual Income Tax Return, are required to file their returns on or before April 15 of each year. This year is an exception because of Good Friday being April 15 and returns are due on April 18.

An additional three days is granted to those wishing to contribute to their IRA and claim a tax deduction for 2021. This timing of the contribution applies to Roth IRA and Health Savings Account contributors as well.

One of the greatest benefits of contributing to your retirement in this manner is that the IRS helps you make the payment by reducing your tax liability by the amount contributed. The maximum contribution amount for 2021 is $6,000 unless you are age 50 or older which grants you an additional $1,000 “catch up” contribution for a total of $7,000. Keep in mind that this is an individual contribution limit. A married couple filing a joint return may be entitled to a $14,000 tax deduction if both qualify for IRA contributions. This is significant savings for most filers.

If you are self-employed, more good news for your contribution timing to another type of IRA called a Simplified Employee Pension Individual Retirement Account (SEP-IRA). The contribution timing of this particular type of plan is allowed until the filing of your return, which may include extensions of time to file. For example, an individual may extend the time for filing, not delaying the payment of tax, of her return for 2021 until October 17, 2022. These additional months to file your return may allow the accumulation of funds to maximize your contribution, and resulting deduction, for 2021 retirement purposes.

This type of IRA allows a much greater deduction than a Traditional IRA. Based on your net self-employment income, reduced by a portion of your FICA and Medicare to be assessed on such income, you may contribute up to $58,000 for 2021 and deduct it against your income. This sounds like a circular equation but it is a very valuable deduction and may apply to those that have self-employment income.

The tax deadline is fast approaching! Seek out the advice of a CERTIFIED FINANCIAL PLANNERTM professional to help you maximize your tax savings. My philosophy has always been “it is better to pay yourself first”. By contributing to your IRA consistently over a period of years, you will gain confidence for your future success in retirement and save significant taxes along the way. Now, go smell the roses and place a smile on your face!

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Prudent Steps to a Secure Future

Our world is experiencing disruption on a global basis. War in Ukraine, inflation at a 40 year high, gasoline prices reflect the 70s, and continued impact of a rampant virus. Have you had enough? Yes, me too. However, my father taught me that words are cheap and action is riches. This was his statement to, “quit griping and start working” to achieve better results.

The people of Ukraine are suffering in ways that U.S. citizens cannot relate. All of us can sleep tonight in a warm bed, eat a nice dinner and drink water that is potable. Medical care is available and jobs are plentiful. Why I am stating the obvious? To provide you some perspective. Life is good in the United States even in the midst of all this disruption.

When experiencing moments of potential recession, it is critical that you review your future plans to determine if small adjustments are needed. It is important that we understand the current economic environment will pass (no, I don’t know when) and life as we know it will return for us. The resilience of our republic continues to amaze me.

The following steps should be considered to provide your family a more secure future. First, review your cash flow spending and determine the priority of these items. Do you actually need a new laptop or is it a want? Is a new car needed or do you simply want one? Also, remember it is better policy to make sound financial decisions based on your current cash flow, savings and needs rather than surrendering to the fancy marketing of the gadgets that make us more comfortable.

Next, reduce debt balance to zero as quickly as possible. The purpose of this is to relieve the pressure on your family’s budget. Any credit card balances should be paid monthly to eliminate the potential cost of credit through high interest rates. Federal Reserve Chairman Jerome Powell is recommending, next week, a 0.25% increases in the discount rate to be implemented for purposes of slowing the rampant inflation rate in the U.S. Additional rate increases are anticipated through 2022.

Another step is to review your portfolio to determine your true risk inherent in the underlying positions you own. In the past 12 years, the U.S. markets have rewarded equity investors. In the current market contraction, it would be advisable to review your positions for possible gains to protect the overall balance in the account. I am not suggesting market timing. However, I am recommending that you determine a price you would wish to reach before selling your investment positions. For example, lets assume we buy AstroWorld common stock, a fictitious company, for $35.00 per share and set a price of $70.00 at which we would sell the position. One of the greatest investors in history was a man named Peter Lynch. As the manager of the Magellan Fund of Fidelity Investments, his fundamental approach to investing was to perform the same process on each position he bought in the fund. If it was a good approach for him and the fund he managed, perhaps it may be good for your family.

Lastly, keep calm during market correction periods. Panicking only increases the probability that you will make poor decisions that could harm your family’s future for many years. By thinking about your financial decisions with a cool head, the likelihood of taking advantage of market declines allows you to “buy low and sell high”. 

Of course, these steps will not ensure great returns or eliminate risk of loss. However, you will give your family and you the best chance to attain your retirement goals and security for the future.

One of the best methods of gaining confidence that your family’s finances are on the right track is to seek a complimentary “financial checkup” from a CERTIFIED FINANCIAL PLANNERTM professional. Your investments, like your body, may suffer if proper attention is not given. See you on the jogging trail!

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Buy or Sell?

Life has a way of keeping things interesting. After a long cycle of bull returns, the time for profit-taking has arrived. This is the process of capturing the gains in the investments that have performed well. I will explore some of the factors that are currently active in the economy, the markets and what you can do to maximize your family’s best interest.

The overall economy is improving in the United States. When I state that comment I sort of cringe thinking about the impact that is being felt by the families of our country. Inflation has reached a 40-year high at 7.5% according to tradingeconomics.com. Some of the factors leading to this excessive rate are labor shortages, soaring energy costs and supply chain disruptions. Based on a review of ktvz.com, March and April, 1980, inflation had risen to an unprecedented peace time level of 14.6%. Acknowledging that this rate is extremely high by today’s standards, the highest inflation factor in the United States was experienced in 1778 at 29.78% (Investopedia.com). 

Improvements in market controls, inventory production, delivery methods and banking policies contributed to maintaining a more reasonable inflation experience for many decades. It is not unusual for the people of the United States to be subjected to a 2% – 3% inflation rate in our overall economy. However, in our modern world where we rely on transportation and housing that must be heated and cooled with natural gas or electricity, an inflation rate above 4% begins to reflect on people’s lifestyles.

The unemployment rate is at historic lows for our country. This rate often touted by politicians to show their outstanding work on the economy is misunderstood by the mass of Americans. To properly understand the application of the rate to the economy, you must consider that underemployed and those individuals not actively looking for work are not considered in developing the rate. For those individuals seeking employment, there are currently more job opportunities than workers to fill them. This is a big plus for our economy. During times of high demand for skilled workers the hourly wage rises. It is simple economics – supply and demand. When demand for something (or someone) rises and the supply (people looking for work) is static or lower, the price for labor will be higher. 

Rising wages are good for workers until they realize the costs of goods rise along with them. Companies will increase prices on goods to cover the increased cost of labor while maintaining the profit margin necessary to continue operations.

Another factor affecting the economy is the supply chain disruption. Goods that are manufactured outside the United States must be imported for sale by businesses to the public. Recently, the shelves of some of the largest retailers have been limited or out of products demanded by the public for their functions in life. Don’t get me started about the “Toilet Paper Run of 2020”. There was plenty of the product for the current needs of people in our country. However, a rumor on social media stoking the fears of people caused a panic to buy greater quantities of toilet tissue. Some of the memes on social media were hilarious! At one point it appeared that toilet tissue would become the currency of choice due to the high value it held in the public’s mind.

All these factors create economic conditions of expansion or, more recently, contraction in the economy. People are subjected to many emotions in life. However, in my 34-year career, I have discovered two emotions that are most prominent when it comes to financial decisions about a person’s retirement and investment accounts – fear and greed. Memory fades quickly from the very positive returns of only a few months earlier when a market correction appears. People who have enjoyed almost 14 years of positive returns in their portfolios are suddenly stricken with the fact that markets can (and often do) go down.

Recently, I asked a client if she would sell her home if it went down in value. The look on her face was as if I had asked her to donate a kidney! Her response was “that is a long-term asset and has tremendous value to me”. I then asked the simple question, “Your retirement account is your lifetime asset. Why do you want to sell it when it is down?” She simply stated, “You are right.” The stock market is the only investment I am aware that people buy when its high and sell when its low. This is the opposite to increasing your overall lifetime return and cash flow.

Buy or sell? Each person must deal with their fear or greed. By remaining calm when others are frantic and scared, you will be rewarded with greater opportunity for growth over a lifetime. Make certain your risk tolerance is properly reflected in a diversified portfolio and your cash reserves will accommodate 90 – 120 days of living expenses. This correction will pass.

Your lifetime of financial security for your family is no laughing matter. To alleviate the stress from worrying about your finances, seek out a CERTIFIED FINANCIAL PLANNERTM professional to help you build confidence in your future so you can laugh all the way to retirement and beyond.

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