Insights + Resources

Keep Calm, Stay On Plan

Sep 2, 2019

Numbers
Expect volatility, but avoid letting the headlines alter your plans.

Recent headlines have added volatility to the markets. There will always be new headlines, and any of them could mean turbulence for Wall Street.

As an investor and retirement saver, how much will this turmoil matter to you in the long run? Not as much as you may expect. There are many reasons to remain on plan rather than attempting to intuit or guess when and where big shifts in fortune may arrive.

What is market timing?

Michael Tanney, one of the directors at Magnus Financial Group, puts it plainly: “Market timing doesn’t work […] Every bear market has historically given way to a bull market […] No one can predict the timing of these moments.” Market timing is the use of predictive tools and techniques to predict how the market may move and make investments accordingly.

When you work with your trusted financial professional and cultivate a financial strategy, your need to factor in market timing diminishes. You also don’t need to sit still if you have concerns. Instead, you have a strategy that is based on your goals, risk aversion, and time horizon. This balanced approach means that you won’t need to make hurried decisions when volatility arises.

There may well be a situation in which you may need to adjust your strategy, but it’s also possible that snap judgements might cause you to undercut yourself. The market reacts to headlines, but it’s just as common that quick dips might see fast relief.

Remember that many investors come to regret emotional decisions.

The average recovery time for bear markets (meaning a downward swing of 20% or more), where equities return to bull market levels? About 3.2 years (measuring each recovery since 1900). For that reason, investing with the longer term in mind, with periodic and carefully considered rebalancing (alongside your trusted financial professional), may allow you to better weather headline-induced peaks and valleys.

Breaking news should not dissuade you from pursuing your long-term objectives.

The stock market is always dynamic. Episodes of upward and downward volatility come and go. A wise investor acknowledges that downturns are expected and has patience when they do. Decisions made during market turbulence can backfire. While some of these ups and downs may be significant enough to signal a change in your asset allocation, they need not change the fundamentals of your investment policy.

Tags: ,

More Insights

Nov 15, 2019

Marriage changes everything, including insurance needs. Newly married couples should consider a comprehensive review of their current, individual insurance coverage to determine if any changes are in order as well as consider new insurance coverage appropriate to their new life stage. The good news is that married drivers may be eligible for lower rates than … Continue reading “Insurance When You’re Newly Married”

Nov 13, 2019

 With the children now out of the house, financial priorities become more focused on preparing for retirement. At this stage, you may very likely be at the height of your earning power and fast approaching peak savings as you lay the groundwork for retirement. During this final leg to retirement – and throughout your retirement … Continue reading “Insurance Needs for Empty Nesters and Retirees”

Nov 11, 2019

“What is your greatest retirement fear?” If you ask any group of retirees and pre-retireesthis question, “outliving my money” will likely be one of the top answers. In fact, 51% of investors surveyed for a 2019 AIG retirement study ranked outliving their money as their top anxiety. Retirees face greater “longevity risk” today. The Census Bureau … Continue reading “Reducing the Risk of Outliving Your Money”

Nov 8, 2019

For many investors, it can be tempting to think of one’s portfolio in terms of “gains” or “losses.” True, this is a central concept to understanding market behavior, but to truly maximize your investing knowledge, you also need to know about “unrealized gains,” “unrealized losses,” and how they can work to your advantage. As always, … Continue reading “Unrealized Loss and Gain”

Nov 6, 2019

As a consumer, when you purchase an expensive item, like a car or refrigerator, you expect to receive a warranty that the manufacturer will repair or replace that product if it breaks down. A warranty makes sense for big-ticket purchases, but what about for a home?

Insights + Resources >