This Week’s Blogger: Scott D. Heins, CFP®, IAG Chief Investment Officer
Recently we have heard from a number of clients asking “Is it time?”
Some are concerned about recent market events and are asking if it is time to switch to a more conservative investment approach.
Others are cautiously optimistic about the future and are asking if it is time to switch to a more aggressive investment approach.
In our opinion, the time to think about time is when we are proactively planning for portfolio cash flow, not when reacting to recent turmoil.
Our Portfolio SegmentationTM process helps our clients put investment time on their side. Investments that will be needed for cash flow in the short-term are invested in short-term, less volatile investments. Investments that will be needed in the long-term are invested in long-term, more volatile investments.
We apply this Portfolio SegmentationTM process to all of our clients’ financial and investment plans. It is our disciplined effort to neutralize the impact that short-term volatile markets may have on our clients’ current future cash flow while still seeking investment returns that will sustain their long-term cash flow needs. We do this whether the markets are up, down, or sideways because the future is unknowable until it is the past.
Volatile markets should not change your financial plan. They should not change your cash flow. They should not change your investment strategy. They should have zero impact on your long-term plans.
The one, lonely, singular area of your life where volatile markets will have an impact is your account statement. Your statement lumps all of your different investments with all of their different timeframes into one dollar figure, takes a picture of it on one day at the end of the month, and then compares it to where you started the year nine months ago.
It is almost like statements are designed to warp your perception of time. If some of your investments are long-term, why are we judging them over such a short timeframe? This makes about as much sense as planting an oak tree and then digging it up every three months to verify its root system is healthy.
While times like these can be unsettling due to a sensory overload of pessimism, they are not unexpected over a lifetime. We know they will happen. We just never know exactly when. We always plan as if they will start tomorrow whether markets are high(er) or low(er).
Now that we know what happened in the first nine month of 2022, is it time?
Yes, it is time. It is time to ignore short-term negativity and maintain well-designed long-term plans. It is time to think in years, not days. It is time to take advantage of the opportunities in front of us while valiantly sidestepping the very tempting urges to abandon our long-term plans at the worst possible time.
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.
Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.
Quote of the week:
Shelby Cullom Davis: “You make most of your money in a bear market, you just don’t realize it at the time.”