It has been a rough six weeks. The financial markets have persistently declined, interest rates have risen, and you may be getting weary of bad news.
These are the times that test an investors’ patience. These are the times where the siren songs of foolish decisions get louder. These are the times for gentle reminders (and perhaps some ear plugs).
What should a long-term investor do right now? We have five strategies for your survival.
Quantify how this market decline has impacted your cash flow and long-term financial plan.
Do you have the same amount of income landing in your checking account every month? Has this decline derailed your long-term financial plan or (because we know downturns happen with regularity) was it already built into your plan? The answer to both of these questions is likely no which should give you the confidence that traders are currently lacking.
Implement Tax Reduction TradingTM.
We understand you really do not like to see your account balances going down, so why not let Uncle Sam share in your unhappiness? Right now we are reviewing your accounts for potential tax deductions and – while preserving the integrity of your portfolio allocation – selectively trading to reduce your future tax liabilities.
Check your Portfolio GPSTM.
All of this market noise can be disorienting. Good thing you have a Portfolio GPSTM that was carefully designed to complement your financial plan. We are currently reviewing and rebalancing your accounts to slightly increase your allocation to stocks now that they are relatively less expensive than at the beginning of the year.
Remember the (er)s.
This is not the angry kind of “arrrgh” reaction from looking at account values decline, but the thoughtful (er)s – buy low(er) and sell high(er). Mathematically, there is nothing more powerful than following a long-term disciplined process of buying low(er) and selling high(er). We fully acknowledge that we are incapable of timing market bottoms and tops, so we focus on helping you set and respect your Portfolios GPSTM regardless of how the market is behaving.
Perform statement First Aid.
Time heals all wounds. If you believe opening your monthly statement will create regret and self-destructive thoughts, perform statement First Aid. Instead of inflicting a new wound by slicing open the top of the envelope, select an appropriately sized Band-Aid and affix it to the front of the envelope. Next to it write “This will heal over time” and then write a date eight years into the future next to the Band-Aid. Place the statement in a folder and open it in eight years to check on your statement’s healing process. You may be pleasantly surprised.
We may or may not have experienced the bottom of this market swoon, but using these five strategies can help you survive until the markets are overvalued again.
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.