As we’re nearing our way towards the end of 2020, it’s now a great time to consider a few questions to ask your advisor. After facing the quickest draw down in US market history, we’ve certainly recovered in a similar fashion. While we have made headway in a positive direction, there is still expected volatility on our horizon. Consider the following:
- Am I still taking an appropriate amount of risk?
While there is no perfect answer or formula for how you should allocate between equity and fixed income exposure, it’s important to gauge your ‘risk appetite’ routinely, especially during big life events. We most commonly see people start to question their exposure in times of volatility.
One of the least optimal decisions you can make financially is selling at an inopportune time, or generally when the market is declining and/or nearing the bottom. An appropriate risk appetite ensures that when emotions run high, you can still feel comfortable staying the course.
- Are there any appropriate opportunities ahead?
If there is one positive thing to come out of quarantine, it is a relief to our normal cash flow expenditures – for me specifically, the “dining out” portion of my budget has drastically decreased. More so than not, I have heard from many people that they currently are saving money. With increased cash reserves, it’s important to discuss any potential market opportunities ahead.
For any excess cash, it’s worth considering adding to your portfolio, as there are many strategies for entering in the market. As the adage goes, it’s time in the market not timing the market that can make the biggest difference in your outcomes. If history has taught us anything, while the market experiences downfalls, it has always continued to grow with time!
- Does this pandemic change my overall financial plan?
As we like to say in this field, our crystal ball was certainly cloudy as we experienced the start of a global pandemic earlier this year. While no one expected this type of event, there are some important things to consider as we recover and move forward:
- The most recent bear market response is focused on a pandemic, which we commonly equate to a natural disaster, rather than a fundamental issue in the markets (like 2008-2009).
- While we focus on the recovery of the economy and markets as a whole, you are not invested in the entire economy. Especially with actively managed funds, their investment teams are strategically aiming for sectors that are likely to recover more quickly from the pandemic, while avoiding companies and sectors that may face headwinds for months to come.
With these considerations, the most important thing to realize is that each financial plan is different. If you are near a new chapter in life (retirement, new job, marriage, etc.) or expecting major cash expenditures (college tuition, a new child, etc.), reach out to your advisor to ensure that these life events (and the related expenditures) are considered.
In closing, there is never a wrong time to take a step back and ensure that you are in an optimal position for your financial future. When hiring an advisor, you’re certainly taking the first step to achieving that. At Atlanta Financial, a recently announced FT Top 300 Registered Investment Advisory Firm, we do our best work when we work side-by-side with you every step of the way. Reach out to your advisor today to make sure you are still on track for what’s to come in 2020!
The foregoing content reflects the opinions of Atlanta Financial Associates and is subject to change. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct.
Past performance may not be indicative of future results. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful, or that markets will recover or react as they have in the past.
The Financial Times 300 Top Registered Investment Advisers is an independent listing produced annually by Ignites Research, a division of Money-Media, Inc., on behalf of the Financial Times (July 2020). The FT 300 is based on data gathered from RIA firms, regulatory disclosures, and the FT’s research. The listing reflected each practice’s performance in six primary areas: assets under management, asset growth, compliance record, years in existence, credentials and online accessibility. Over 750 qualified firms applied for the award, 300 of which were selected (40%). This award does not evaluate the quality of services provided to clients and is not indicative of the practice’s future performance. Neither the RIA firms nor their employees pay a fee to The Financial Times in exchange for inclusion in the FT 300.