You’ve been diligent about saving. You’re feeling pretty good about your financial future. Then one day, you check your 401(k), and BOOM—it’s down $15,000. Suddenly, listening to the evening news feels like a horror movie, so you switch to Best of the ‘70s on Sirius Radio instead. Sound familiar? Market swings can be nerve-wracking, making you wonder, “Am I still on track? Should I have stuffed cash under my mattress instead? What now?”
Here’s the good news: Markets historically bounce back. Even so, it’s easy to panic. As Nobel Prize winner Richard Thaler pointed out, in his book on behavioral economics, “Misbehaving”, markets tend to overreact, then correct. The trick? Not overreacting yourself—which is where a financial advisor (me) comes in.
A Steady Hand in Choppy Waters
Market reactions range from full-blown meltdown (“I’m doomed!”) to bargain-hunting optimism (“Time to buy!”). I have clients at both ends of this spectrum. At FIP, we build financial plans for all clients, no matter their asset size. If a market dip throws your goals off track, we already have your plan in place with your goals, income, expenses. So we are ready to make minor tweaks—like nudging up savings or pausing that kitchen remodel—to keep your plan intact without drastic sacrifices.
How an Advisor Helps at Every Life Stage
Mid-Career Crisis Averted
Denise and David — A couple in their 40s saw their equity-heavy 401(k) drop 20%. Panic? Nope. We adjusted their savings by less than 1% of their salary, rebalanced a couple of funds, and trimmed their spending by 2%. It meant going to 10 instead of 12 concerts this year. Boom—back on track, no lifestyle changes required.
Late-Career Reality Check
Jimmy — A 55-year-old aiming to retire at 62 saw a potential shortfall. We crunched the numbers: Saving 3% more and spending 2% less kept him on course. Alternatively, he could work just nine months longer and retire at 63 with zero worries. He felt he was very much on target still.
Retired & Relaxed
Jane and Bill, both in their 70s, were already drawing required minimum distributions (RMDs). Thanks to their balanced 60/40 portfolio and realistic retirement goals, the market dip didn’t faze them. As part of their usual MO, without any coaxing from me, they chose to reinvest most of their RMDs instead of splurging on travel or home upgrades. Talk about financial zen!
Stay Ahead of the Next Market Rollercoaster
Instead of reacting to market swings, plan ahead. Investing is a lifelong journey, full of ups, downs, and the occasional loop-de-loop. The key? A solid financial roadmap and an advisor (like me!) to keep you on course. With the right strategy, you’ll be able to handle whatever the market throws your way—with confidence, clarity, and maybe even a little extra cash for that bucket list vacation.
Investments in securities do not offer a fix rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. No system or financial planning strategy can guarantee future results.
