With the stock market having recent sharp volatility Matt Golab Chief Advisor of Aaron Matthews Financial Resources adds some perspective to the dilemma many investors are facing.
ELK GROVE, Calif. - Feb. 29, 2016 - PRLog -- The Clash said it well;
Should I stay or should I go now?
Should I stay or should I go now?
If I go there will be trouble
An' if I stay it will be double
So come on and let me know
This is how many investors are feeling right now after the market volatility the last number of days and remembering the drop that took place in the fall. Stocks will drop and stocks will rise, which can often have a painful effect on our accounts. Even if only for a short period of time, those drops can hurt and shake our faith.
So often clients will ask what they should do when markets drop and have sharp ups and downs. This can often be the problem, the assumption that something must be done. Markets will go up and down, this will not always alter our course and overall planning.
We have all been on a road trip and hit traffic that stops suddenly and then speeds up but only to slow down again. The highway isn’t shut down, just normal traffic. It would be unwise to get off the road and take a completely different route.
This is the same dilemma investors are facing when it comes to the current stock market condition: the mistake of selling near the bottom and buying near the top. However, there are some things that can be done to minimize the agony of an up and down market.
The first is to ensure you have a course and not just money in the market. Investments are not neutral; they are problem solvers. Whether it’s a tax-free bond, an annuity, a savings account or anything in between, investments are there to solve problems.
Are our investments on a course to help us get where we want to go? If I am trying to produce retirement income each and every month and my portfolio is heavy in equities and my account is dropping by large amounts, I need to evaluate if my account is on the course I need to be on.
It is not an equities problem, it is a me invested in the wrong thing for my goals problem. If the year or the last few years you have been investing without a plan, given what’s going on in the stock market these days, you’re likely in a panic, wondering whether to sell or buy based on what’s going on around you. Instead of panicking, we need a plan, and having a plan is far better than having no plan. No plan is dangerous to both your mental and financial health, especially if we are holding investments not created to solve our financial problem.
This is why I always create financial plans for clients that take into consideration longevity, income needs, potential tax issues, risk assessments, and many other factors. Too often investors get excited to buy an investment as though it can act on its own regardless of what the investor is trying to accomplish. It all comes down to solid planning and then carefully choosing how to invest.
Investment Advisory Services offered through Global Financial Private Capital, LLC., an SEC Registered Investment Advisor.
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Stock Market, Should I Stay or Should I Go?
February 29, 2016 at 19:51 PM EST
