By Dave Coen
People around the world are understandably worried, not only about the safety of their loved ones, but also about the status of their life savings. In turn, financial advisors are working hard to help their clients think about (sometimes substantive) mid-course corrections to their plans.
At the same time, advisors are making sure clients avoid panicked emotional reactions that could have an even more detrimental effect down the road. It is important to try to remain rational about portfolio decisions.
By now we should all be well versed about what we should be doing to keep our families safe from a health perspective. Each day the news is filled with information on what it looks like to protect our family to keep everyone safe.
What about our Financial Health? Here are 5 questions we should consider:
Has my personal financial situation changed in any way?
Obviously, everyone’s situation has changed in some way. This question is intended to address that status of your income and continuation of your job security. If these have not been affected, then this aspect has not really changed for future planning purposes.
Do I have sufficient cash reserves to see me through the next few months if my income has dropped?
Here we are talking about the immediate need for cash flow to pay rent, utilities, purchase groceries and daily living costs.
Typically, if a person has 3-6 month’s need saved up in a cash emergency fund (outside of retirement accounts) then it should give good security in case of emergency. For those who have been funding max-funded Whole Life policies, this is a good example of one of the benefits.
Do I have a properly diversified portfolio?
As you know, I am a strong advocate for proper planning of our finances which should result in a properly diversified portfolio for retirement assets. If people have a high-risk tolerance and want to “Gamble” with individual stocks and self-trading, then that is OK if they are comfortable with that, and there could be some great opportunities now, but there are two criteria that I would suggest:
- Limit your investment and trades in individual stocks to an amount that would not negatively affect you if you lost the entire investment or at least a large portion of it. I always suggest to clients that they treat individual investments as “Vegas Money”
- Make sure that your retirement money is properly invested strategically over various sectors, various funds, various geographical locations and tactical considerations including correlation.
Is my portfolio being rebalanced when appropriate on a regular basis?
Regular portfolio rebalancing is always important, but especially valuable in times of turmoil and high volatility. Often a portfolio’s balance is upset during high volatility and attention needs to be paid to keeping in line with the way we originally intend them. If this is happening through your financial advisor, then you should be able to relax in this knowledge.
When do I need the money in my portfolio?
This question is vital for you to consider as you look at the long-term goals for your family. As mentioned in previous communication – “I have lost nothing until I have sold something” Similarly, “I have not gained anything until I have cashed it in”. We always tend to see the gains as “What we have” and the losses as “What we have lost”, but neither is true.
What is the timeline for need of your retirement money? At age 55 – 60, your withdrawals could still be spread out over the next 30-40 years so you need to keep that into perspective while you are watching the news every day.
About Dave
Dave Coen is a Financial Advisor with SageView Advisory and the CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn.
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This material is designed to provide accurate and authoritative information on the subjects covered. It is not however intended to provide specific legal, tax, or other professional advice. For specific personal assistance, the services of an appropriate professional should be sought. A diversified portfolio does not assure a profit or protect against loss in a declining market.
SageView Advisory Group, LLC is a Registered Investment Adviser. This report is for informational purposes only and is not a solicitation to invest. Advisory services are only offered to clients or prospective clients where SageView Advisory Group, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future results. No advice may be rendered by SageView Advisory Group, LLC unless a client service agreement is in place. CA insurance license #0G82578
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