It’s obvious that things in our world are more than a little uncertain these days. It feels like we’re constantly waiting for the other shoe to drop. Most of us dislike this level of uncertainty, but do you know what dislikes it even more? The market.
Case in point: The Dow has had eight weeks of consecutive losses this year, and the S&P 500 tallied seven weeks of losses. (1) As a result, many economic leaders are predicting a recession in the near future. (2)
We can point our fingers at many factors as the cause of our recent nail biting: rampant inflation, the Fed’s solution of increasing interest rates, and international unrest. But the fact remains that we have no control over any of it.
We at Stratos Wealth Partners want to help you take a deep breath and walk you through whatever our markets decide to do. Here’s how we are watching over your finances and taking proactive steps to help your financial confidence.
Big-Picture Planning
We don’t make investment decisions based on what everyone else is doing or what’s popular in the investment industry. Whenever we make planning decisions with you and offer investment recommendations, we do it with your goals in mind. When the markets get shaky, we go the extra step of reviewing your objectives to make sure you’re still on track and make educated decisions that are not based on panic or emotion.
This starts from the very beginning of our relationship with you. We use conservative return numbers when analyzing the potential outcomes of your plan because we know that corrections and bear markets will come again. We also use asset allocation “buckets” that divide your wealth into short, intermediate, and long-term strategies to help you make the most of a volatile market.
Especially during times like this, it’s important to have an emergency fund or a percentage of your portfolio that is either in cash or liquid enough should you need funds for unexpected circumstances. While cash investments may not provide a lot of growth, having a cash contingency fund with at least one year’s worth of living expenses will protect you against having to sell investments at low values to free up cash.
We Know Your Risk Tolerance
Do you know that feeling in the pit of your stomach when you make a decision that’s too risky for your comfort level? Our goal is to help you avoid that feeling when it comes to your investments. Before investing any of your money, we determine your risk tolerance—the amount of risk that an investor is comfortable taking or the degree of uncertainty that an investor can handle.
Like most things in life, your risk tolerance may change with age, income, and financial goals. We don’t want you to lose sleep at night, so we review your risk tolerance and how much risk you can afford to take and adjust your investments over time.
We also watch over your money, and when it’s time to get out of an investment because the risk is rising, we will contact you about adjusting your allocation.
Timing Matters
During bear markets, it’s important to remember that investors only realize losses when they sell, so it’s critical not to sell when the market is down. When you need to access your money is an important factor in potentially avoiding those losses.
For example, if you are a decade or more away from retirement, you can likely wait out a recession or correction and benefit from the recovery. If you need access to your funds in the next five years or are within your first five years of retirement (frequently known as the “fragile decade”), (3) a recession will make more of an impact on your money and your plans.
From a practical perspective, we make sure your portfolio’s allocation is set up with your time horizon in mind. If you need money in the short term, your portfolio will likely hold investments like cash or short-term bonds. Because retirement can last decades, you may still want some of your money in investments that can produce long-term growth, but your portfolio will look very different from that of a 40-year-old in the peak of their working years.
We Are Your Emotional Support System
One of the most important rules in investing is to refrain from making emotional decisions. It’s easy to get swept away emotionally when the market negatively wreaks havoc on your finances. But if you stay true to your investment strategy and avoid making decisions when emotions are running high, you may avoid losing even more.
Keep in mind that bear markets have happened before—and they will happen again. As long as you’ve created a disciplined financial plan and have a valued advisor monitoring your money, you’re doing your part to prepare. If you don’t have someone you can turn to when the market gets wild, we’d love to support you and help you build your finances for a strong future. Schedule a complimentary introductory call by reaching out to us at 330-576-3912 or lguiney@stratoswp.com.
About Liam
Liam Guiney is partner, financial advisor, and client portfolio manager at Stratos Wealth Partners, an independent investment advisory firm providing personalized financial plans to help clients pursue their goals. With over 20 years of experience, Liam is dedicated to walking his clients through their financial opportunities and challenges, simplifying the complex so they can focus on what’s most important to them. Liam is known for building long-lasting relationships and focusing on individual needs to develop strategies that will help his clients prepare for their ideal retirements.
Liam graduated from the University of North Carolina Greensboro with a bachelor’s degree and earned a Master of Science at Wake Forest University. He is also a CERTIFIED FINANCIAL PLANNER™ professional. When he’s not working, Liam spends his free time with his wife, Alice, and their son, Nicholas. You can often find him exercising, golfing, or supporting his favorite community organizations through fundraising and volunteering, such as Catholic Charities, the Make-A-Wish Foundation, and cancer research organizations. To learn more about Liam, connect with him on LinkedIn.
This material was prepared for Liam Guiney’s use. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Asset allocation does not ensure a profit or protect against a loss.
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(1) https://finance.yahoo.com/news/stock-market-news-live-updates-may-31-2022-111708003.html
(3) https://www.lifehealth.com/navigating-retirements-fragile-decade/