Staying The Course Is Typically BestSubmitted by LWM | Linden Wealth Management LLC on August 27th, 2019
As an independent RIA, I draw from a variety of valuable resources including TD Ameritrade, Vanguard, among others. A lot has been written about market volatility, and the effect it can have on an investor's psyche.
When the financial markets are in turmoil and account balances start to fall, there's a strong temptation to de-risk and stem any perceived losses before things get worse. This is especially the case when operating without the benefits of an investment plan.
Last fall was another example of heightened market volatility. Vanguard shows how selling into that downturn hurt you. A hypothetical 60% stock and 40% bond portfolio that stood at $1 million on the morning of November 1, 2018, would have lost 5.7% of its value by Christmas Eve. Selling the portfolio at that time and fleeing the markets, even if briefly, would have cost an investor tens of thousands of dollars in two months, versus the alternative of staying invested.
As extreme as that experience was, it wasn't all that unusual. The stock market corrects by 10% or more on average once a year. When faced with a similar situation, consider how you might feel if the markets rebounded and you could have recouped all of your money, and more.
Changes to your investments should be driven by changes in your life, not the latest twists and turns of the market. Financial goals tend to be long-term, so should your investment approach. If you're lacking a plan, or feel it doesn't reflect your priorities, contact us, and we'll show you how a well-constructed plan is an integral part of investment success.
As a fiduciary and fee-only advisor, I don't make money by selling financial products. I'm free to recommend the strategies and investments that make sense for couples and individuals, based on a clear understanding of where you're headed in life.
If an open conversation of this kind will be helpful to you, request an appointment now. Feel free to call out any specific questions you'd like me to address.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.