Preparing For The Great Risk
There’s not much we can predict about the stock market eb and flows. Rather, we have to prepare for the risks that come with investing. At Know My Plan we study those risks and know how to make a plan for the future.
THE BAD NEWS
On January 3rd, the S&P 500 hit a yearly high of 4,796.64
On October 13th, the S&P 500 hit a yearly low of 3,491.59
A drop of 27.21%.
At 8:30 am on October 13th, a horrific inflation report was released that spooked the market.
Of course, what happened next…
THE GOOD NEWS
With no “new” information, the S&P 500 turned and started going higher and higher.
Nobody saw this coming or predicted it.
In fact, October was the best month for the Dow Jones Industrial Average since 1976.
We can’t advise you on economic and/or market timing. No shame on us for that: neither can anyone else, as the last three years of chaos conclusively demonstrate.
We are happy to make a lifetime financial plan with you, then spend the rest of our relationship helping you pursue the plan to fruition.
WHAT CAN WE DO TODAY
- Have adequate cash reserves or build towards having adequate cash reserves.
If you own a home, we suggest keeping at least $25,000 in cash.
In addition, keep funds set aside in cash for any major purchases you have planned for the next three years.
- Buy companies that have been through the ups and downs of the market for your long-term nest egg money.
Ownership in companies (stocks) has historically produced a superior return to other asset classes over time.
The historical return of ownership in companies has outpaced inflation on average by 7%.
The great risk is not having ENOUGH exposure to these companies for a three-decade plus retirement.
- Focus on controlling your savings rate, living within your means, and following your financial plan. NOTE: This is NOT the time to stop investment contributions.
- Keep the faith. Be patient. Remain disciplined.
If you have questions, please reach out to us.
If anyone of your friends and family has financial questions, we will be a sounding board for them. We would be happy to talk to them.
If they are important to you, they are important to us.
–Nic & Jeff
We are a full-service financial advisory company that allows you to make a one-page plan for your money and prepare for your future. Learn more about what we do and how we can help you here.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Content in this material is for general information only and is 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 directly.
10 Actions To Take 10 Years Before Retirement
In this paper we discuss 10 actions you should take to develop and deploy a successful long-term wealth plan. It will help you make decisions about your financial journey today and well into your retirement chapter.