What to Do While Waiting Out the Bear Market
In our team’s experience, we’ve encountered investors who let emotions get the best of them, reacted to current events and dour market headlines, and always in the wrong way and at the worst time. It's natural to be anxious about your retirement, your investments and any other holdings you may have, but fear cannot run your house.
We’ve also witnessed successful investors who had a financial plan and didn’t deviate from that plan in times of high volatility.
We invite you to remain with us on the right side of the above statement.
The coronavirus is highly unlikely to dissipate quickly. Still, the sentiment reminds us bear markets are like winter showers nurturing spring flowers. For every ferocious bear we’ve encountered, an uplifting bull has eventually followed.
But it may be awhile, and there may be a downpour we must endure. For now, here’s what we, you, and the market can do while we hunker down at home and wait for better days.
What We’re Doing Today
Our specific advice and actions will vary depending on your needs. Planning for retirement looks different than a plan for college, or a new home. In general, we are closely following fast-moving legislative updates and other news, so we can advise you on its impact. Here are a few other areas of interest we’re keeping an eye on, on your behalf:
- Financial life planning: Helping you judiciously respond to the opportunities and challenges specific to your near- and long-term interests and concerns
- Retirement planning: Helping young investors exploit now-higher future expected returns; and helping those in and near retirement manage “sequence risk” (more below)
- Investment management: Rebalancing, tax-loss harvesting, and making other prudent moves to best position your portfolio for future expected growth
- Tax planning and money management: Helping you optimize new tax breaks, loans, grants, unemployment benefits, and similar relief measures for individuals and businesses
- Investor support: Advising you against fixating on daily returns or reacting rashly to scary market news
We want to know how you're doing. The more we know about your specific concerns, the better we can keep you in the know as the financial landscape evolves.
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What You Can Do for Yourself
The good news: One of the reasons clients partner with us was to structure their plans and investments in anticipation of periodic bear markets. Together, we’ve done the heavy lifting of wealth management to prepare them for the current crisis.
Among the most important things you can do for your financial well-being is to look past the market mayhem, and focus on making the most of your life. Try to “set your egg timer to six months,” as this moving piece by Contrarian Edge’s Vitaliy Katsenelson suggests. Consider his advice (emphasis ours):
“We have been given a very unique opportunity to divorce ourselves from material things and spend time with our family. To really spend time with them. We have been given the rare opportunity to prioritize what is most important to us without guilt. The material world is on pause, at least for a few weeks. Try to make the most of it while you can.”
What Time Can Do for Your Retirement Planning
If you're a younger investor, decades from retirement or high-end transition, current market conditions can benefit you greatly. Now is a great time to buy equities (or at the very least, not abandon the ones you already hold), and watch their expected growth compound over time.
If you can do this in a tax-sheltered account like a 401(k), traditional IRA, or Roth IRA, you can build more long-term wealth, even more dramatically.
If you're in or near retirement, the truth is, the current market is not ideal for you. You might face what a sequence of return risks if you sell depressed stock holdings to fund your current spending needs. Essentially, selling stocks at a loss early in retirement inflicts a double-whammy on your portfolio’s future growth potential.
Detailed withdrawal strategies for managing sequence risk is beyond the scope of this piece. But best practices do exist. This is just one critical reason we are here as your advisor: to help you weigh the challenges and possibilities ahead and proceed in an informed manner.
We Are (Still) Here!
Our goal is to support you so you can best support yourself and your loved ones during these challenging times. We and our strategic alliances are conducting business online. Please continue to lean on us for both routine requests as well as specialized demands driven by the current crunch.
As always, your unique circumstances will influence the financial choices we’ll be advising you to make. But your most rational move is to stick with the robust plan you have in place. Update it only when your life’s circumstances call for a change.
Spend less time worrying about your future, and more time taking positive steps to protect it. Set up a Cogent Conversation with us today. We’ll show you how to transform your hard work into durable wealth even through troubling markets.
With years of experience, we know a disciplined investor looks beyond the concerns of today to the long-term growth potential of markets. Investors have had concerns and challenges in the past, and know there will be concerns and challenges in the future.
We are here for one reason: to help you reach your financial goals, come what may. Contact us today so we can help you, too.
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