Financial Planning in Volatile Times - Adviser Investments

Financial Planning in Volatile Times

March 13, 2020

General financial planning wisdom says that it’s important to “stay the course” during times of market volatility. But keeping the tiller steady is a lot easier said than done in stormy markets like the ones we’ve experienced in recent weeks. Here are four tips to help you to steer straight and stay afloat when the markets are roiled.

  1. Review your goals. If the life events you’re planning for are 10-plus years away, a sequence of down days in the market is unlikely to imperil your ability to reach your goals. But pulling your investments out of the market during times of distress could. Simply put, by standing pat through a period of decline, you’ll be positioned to fully participate in the rebound whenever it arrives—instead of committing the classic mistake of selling low and buying high. Shorter-term goals are a slightly different story. If you have funds you expect to need in the next year or so, that money is typically best held in cash so that it isn’t affected by the whims of the stock market’s day-to-day moves.
  2. Keep your emergency fund robust. No matter what your financial goals are, it’s important to have enough rainy-day savings to weather an unexpected situation. Your emergency funds should never be invested in the stock market. We recommend a simple checking account with your local bank or even a money market account with check-writing privileges.
  3. Diversify. Nobody knows which way the market is going to turn from day to day. That’s why effective portfolio diversification is your best friend when it comes to warding off the inevitable ups and downs of the stock market. At Adviser Investments, we believe that a well-diversified portfolio made up of domestic and international stocks as well as a broad swath of bonds, depending on your goals and risk tolerance, helps smooth the ride when markets get choppy.
  4. Talk to your adviser. Stock market drops aren’t easy to take no matter how experienced of an investor you are. Fear is a strong emotion. That’s where we come in as advisers. Our seasoned team of wealth managers has helped hundreds of clients “stay the course” and remain focused on long-term financial goals through some of the most dramatic market corrections in history. We are happy to assist during periods of volatility such as this.

By standing pat through a period of decline, you’ll be positioned to fully participate in the rebound whenever it arrives—instead of committing the classic mistake of selling low and buying high.

One final thing to keep in mind: All bargain-hunters love a good sale—and stock buyers are no different. Our active portfolio managers view stock market drops as a massive opportunity to add values to their funds. Even the worst market storms don’t last forever. Please give your adviser a call to get their perspective on the situation (for example, if you’ve been considering converting your traditional IRA to a Roth IRA, this could be good time to save on the taxable gains generated by the move). Our experience shows that bear markets are often viewed as scary and heart-stopping when they occur but when they are finally in the rear-view mirror they are seen as opportunities.

Please call us if you are uncertain about your portfolio positioning or if you’d simply like to talk. We stand ready to answer any and all of your questions and concerns.


This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be viewed as a recommendation to buy, sell or hold any of them.

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