THREE QUESTIONS TO ASK DURING TIMES OF UNCERTAINTY
As I write this blog on March 16, 2020, there will be points in the day today where the stock market is down fairly significantly. For many, you would think that information would lead to a significant amount of trading over the next several days for our client accounts, however, that is not the case. Our clients, like most investors, are better off staying put as long as they are investing for the long-term. On February 20th and February 24th we updated and made adjustments to our portfolios and rebalanced a large portion of client gains back into their designated risk tolerance. Since then, we have only made slight adjustments where we see fit. It is impossible to know both:
When the stock market will begin to fall, and
When “the bottom” will occur and it is safe to get back in.
That is why it is so important to do the work ahead of time to know how much risk you should be taking in your portfolio and for how long.
For our clients that are currently taking withdrawals, or are less than 2 years away from retirement, most have a significant amount of reserves sitting in traditionally safer investment options or cash to take withdrawals from for quite some time. This will allow for the remaining allocation that is invested a little more aggressively time to recover from a drop in the market. For those more than 2 years away from withdrawals, we would encourage you to think before taking any action.
Aurora Financial Strategies, along with my partners at Gettings Reed in Lafayette, IN, are following one of our oldest principals in times like these:
When Investing, You’ll Inevitably Have Moments Of Doubt And Perhaps Even Fear. When These Doubts Arise, Ask Yourself The Following Three Questions:
Has Your Reason For Investing In The First Place Changed?
Have Your Economic Circumstances Changed?
Do You Need Access To This Investment Now
If you answer NO to all of three, your best course is to “stay the course”. If you answer YES to any of the three, you should review your allocation with a financial advisor that you trust. That’s it – sometimes the toughest times need clarity and simple answers. I encourage you to consider the above. Volatility can be a good thing when investing over time but is not welcome during times of withdrawals. Diversification and patience will be rewarded.
If you would like any additional information from me, or anyone on our team, feel free to reach out directly to billy@billycardwell.com
Billy Cardwell, CFP®
Billy Cardwell is the Owner of Aurora Financial Strategies, a financial advisory firm based out of Kokomo, IN. He can be reached via email at billy@billycardwell.com. Investment Advisory Services are offered through BCGM Wealth Management, LLC, a SEC registered investment adviser. This blog does not constitute advice. This is not an offer to buy or sell securities. Advisor is not licensed in all states.
