Keep Your Eyes on The Road

Investing during market volatility can be like driving during a winter storm. Your best plan of action is to focus on what you can control and keep progressing towards your destination.

And as the markets have turned a little blustery at the beginning of 2022, you might think of your financial plan as the GPS system that you can rely on to keep you on track even when it’s tough to see the path forward.

Here are five aspects of your financial plan that we recommend focusing on as we wait for this storm to pass … and prepare to weather the next one.

1. Your spending.

The single biggest influence on the success of your financial plan has nothing to do with the markets. It’s how you manage your household budget. As simple as it sounds, age-old advice like “live within your means” and “save more than you spend” really do provide a solid blueprint for building wealth and enduring market volatility. And if you don’t currently have a budget, the start of the year is a great time to set one. Pay special attention to any recurring charges that you barely used in the past year, like streaming services, magazine subscriptions, or club memberships.

2. Your debt.

Are your credit card bills for the month a little higher than they usually are? That’s not unusual right after the holidays. Hopefully, you made a budget for your gift-giving and travel and managed to stick pretty close to it. If not, review your new household budget and look for ways to pay down those and other household debts rather than kicking the can — and the growing interest payments — into next month. Whether the market is up or down when your next statement rolls around, any charges you don’t pay off this month are going to be waiting for you.

3. Your automated plan.

Deciding whether or not to invest when the market is slumping can be very nerve-wracking. In part, that’s because trying to time the market is nearly impossible. A much more dependable strategy is to make automatic contributions to your investment and savings accounts every month. Based on the long-term goals that we’ve discussed, we can adjust how those contributions are used as we analyze various options for rebalancing, diversifying, and growing your portfolio.

4. Your cell phone.

Technology allows us to be more transparent with our clients and keep them involved in the planning process throughout the year. But just because you can check your account balances at all hours doesn’t mean that you necessarily should. Likewise, constantly refreshing your social media and news feeds for the latest financial info is only going to make normal market jitters feel like an earthquake.

According to a study by Charles Schwab, from 2000–2019 declines of at least 10% occurred in 11 years. Annual returns in six of those years were positive, with an average gain of approximately 6%.

In other words, market declines are rarely cause for alarm; they’re just a part of investing. And while past performance is no guarantee of future returns, what goes down tends to go back up, especially when you zoom out and take in your full financial planning timeline.

5. Your $Lifeline.

A solid financial plan shouldn’t just build wealth. It should help you to live your best possible life at every stage of your life. And as that vision of a best life changes, your plan should be able to change with it, regardless of what’s going on in the markets.

Call us up and let’s schedule a review of your $Lifeline. Rather than worry about what may or may not happen on Wall Street tomorrow, let’s discuss the life transitions you know are coming, the goals you want to achieve, and how our Life-Centered Planning process can help prepare you for the next unexpected blip on your radar.