Does it ever feel like you're on a roller-coster ride when you look at your the stock market is performing? One day you feel really good as you go up...click...click...click..higer and higher. Then the next day you feel nauseous and sick to your stomach because the bottom just fell out and it looks like you're going straight down?
Did you ever wonder why you feel this way? Is this lack of a "financial planning" perspective at the heart of your emotional roller-coaster ride through volatile markets? We believe that it is. That is why all of our wealth management clients investment decisions are grounded in a personalized financial plan.
When we work through the entire planning process with a client, we spend a lot of time developing a set of very specific goals and objectives. Careful thought is given to how long you need to be invested to attain a specific goal, as well as how to build a portfolio with an appropriate amount of risk and return so that you can reasonably expect to be successful in your plan for that goal.
As a back-drop to that work, we talk at length with you about the level of market risk that you feel that you can live with and not give up on the investment path we've chosen. However, talk is not the same thing as living through one of the larger stock market drops. So we have to adjust accordingly along the way. Adjustments are a natural and required component of well thought out plans. Adjustments can take on many forms from changing your goals, adjusting your time frame, adding more money up front, or adding more money through regularly scheduled additional investment.
The financial planning process provides a context that serves as the foundation of your investment goals. That context is clear, concise and understandable. You know where you are going and through the planning process, you have a strategy to get there; regardless of how many times you go up and down.
It's our experience that because of that context our wealth management clients are largely inclined to ignore the short-run volatility of the markets. While they still have "concerns" when markets aren't cooperating, their concerns are focused more on whether or not they can still reasonably expect that they will reach their goals. They're comfortable that any adjustments that need to be made will be made to keep them on course to reach their destination. Knowing that they are still on course; our wealth management clients are off the roller-coaster ride of emotional ups and downs. That's not only healthier, but a better way to approach investing in general.
Being off that emotional roller-coaster will create an environment where you can remain committed to your long-term goals. You're less likely to make some knee-jerk reaction that results in unnecessary "tinkering" with your portfolio, which could lead to even worse outcomes like buying high and selling low.
It's our belief that investing can be a more reliable and less stressful process when you and your advisor align your investment decisions with your financial plan. If you don't have a plan you will always feel like you're out of control riding the Wall Street roller-coaster.