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How not to blow up your portfolio and financial plan

We got a call the other day from a Verizon Employee who just retired! They worked for over thirty years, giving the world dial tone. They were disciplined and invested. They experienced numerous bear markets and some of the worst recessions that have taken place since the mother depression of 1929; despite this: the 2022 market returns and volatility already have them on edge to blow up their portfolio and financial plan and run; to cash!  It is difficult sometimes to tune out portfolio losses, the negative headlines, and “advice” from your friends (so-called financial experts).

It’s not easy watching your client’s, who worked hard for 30 years, account go down by 15% on paper (this was not the case for this client, thank goodness for Dollar Cost Averaging). There are many nights that I stare at my bedroom ceiling at 3 AM, wondering what else we can do to help during markets like 2022.  I remind myself of our clients’ goals, the firm’s financial planning process, discipline, and our team’s experience and market history! Thinking of those things, you realize it will be ok, and failure is not an option. 

So here are some tips to help you not to blow up your plan during roller-coaster markets! 

  1. Be Patient. It doesn’t feel short-term, but it is. You wouldn’t jump off the roller coaster in the middle of the ride, would you? It probably would not turn out well.
  2. Set up a call with your financial advisor to review your financial plan. The plan should tell you, “You’re OK or not, and do you need to adjust.” If you do not have an advisor, contact us for a free financial plan. 215-947-9190
  3. Be diversified in your portfolio. What is that? Don’t have all your eggs in one basket. 
  4. Don’t get greedy. When the stock market goes down, it is a great time to buy stock at a discount, but you don’t want to buy a falling knife! We don’t want to chase one company (ie. Crypto) because it’s down over 20% this year, and it could go down a lot further! Remember, diversification is “Strength in Numbers.”
  5. This is just a replay on tip number one. Don’t Look every day! Repeat, do not look at your account value every day. It’s short-term. This will help prevent you from making any emotional and irrational decisions. Review your account’s returns over a more extended period, like 3 and 5 years. The investment experience should smooth out over time. If you must look short-term, review once a month or at your quarterly review, not every day. Checking your portfolio daily is the opposite of eating an apple a day. Your probability goes up that you will need a doctor shortly! 

There is no magic solution to avoid volatile times in the market. Actually, I’m wrong. You could invest your money into cash while inflation is at a 40-year high, but that will eventually cost you! Remember, be patient, have a plan, communicate with your advisor, think long-term, be diversified, don’t get greedy, and don’t stalk your accounts every day. Lastly, enjoy your retirement and family, and let us do the worrying if needed. History tells us that worrying is like down markets they are short-term.

Please reach out if you need a free review or a second opinion. It will cost you nothing but your time.

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