Normal market fluctuations shouldn’t be a concern if you’ve prepared appropriately for market volatility and you should continue living your life and spending your money as you usually do.
Here’s a 3-point checklist to see if you have done the work necessary to keep your finances on track regardless of what the financial markets throw at us.
You have a financial plan that covers all your bases.
No financial plan is totally immune to market fluctuations, but by diversifying your investments across stocks, bonds, and other financial vehicles, no single market event is going to jeopardize your long-term security. We also have both long and short-term savings “buckets” that we can utilize depending on your age, goals, and how close to retirement you are.
Where you do have the most control over is your personal spending. If you’re retired, it’s always important that you spend within the boundaries of your annual withdrawal plan. Younger investors might consider increasing their planned savings contributions during a downturn, especially if you’re counting on that money for a home or auto purchase in the near future.
In short: sticking to your plan and living within your means are two of the best financial moves anyone can make during market volatility.
You understand your relationship with money.
A big focus of our Life-Centered Planning exercises is to raise awareness of what clients feel their relationship to money is really like. Most are in the middle of the spectrum of thinking “the game is rigged” to a gambler mentality of “laying their money on the line”. But market volatility can rouse some bad tendencies at both ends of the scale.
Having someone in your life who understands your attitudes towards money is one of the biggest advantages of working with a fiduciary advisor. Always consult a professional who knows you, your history, and your goals before you let bad news or scary headlines distract you from a well-thought out plan.
Your focus is long-term, not short-term.
It’s true that some current market indicators are flashing warning signs. Major stock market averages have experienced daily drops that, while not unusual, still grab your attention. And global trade disputes and political turmoil continue to unsettle investors.
Those who try to time their investments to these or any other economic signals are looking at market history through a dangerously narrow lens. The ultimate size of your nest egg won’t be determined by one week, one month, or even one year. True wealth is built up slowly, over decades of steadfast saving and investing, careful planning, and thoughtful rebalancing when necessary. Today’s losses might be Tomorrow’s gains, or vice-versa.
So don’t let any short-term market worries impact the Return on Life you enjoy from all your hard work and planning. Contact us to talk about your specific situation if you have any questions or concerns.