“If you want to change the fruits, you must first change the roots.”
-T. Harv Eker
Many people are concerned about a market correction. Could this happen? Absolutely. What do you do to prepare for that? Read on…
While in Bulgaria last week, we took a drive to the Black Sea. The countryside is very beautiful. Rolling hills in the valley and mountains on either side. The alternating hay and sunflower fields look like a golden patchwork quilt. It is the sunflowers that stuck out to me. Their little yellow faces would all look toward their motherly Sun and follow her across the sky. At dusk they would all droop their heads in almost a sadness, until she returns the next day. To my surprise, sunflowers only last 8-12 weeks, whereas the oak trees that line the fields live for hundreds of years. Why? The oaks grow strong deep root systems that allow them to handle the night much better than the sunflowers.
So how do you handle the eventual “nights” in the stock market? A Strong financial foundation is crucial.
Have an emergency fund – Have at least 6 months living expenses in cash. If your income varies, have more. If retired, I like to have one or two years of cash.
Live within your means – If you can save 10-20% of your gross income AND have 6-12 months of cash, you are on the right track. If not, you may want to reflect on WHY you don’t. If you are retired, are you taking only the amount according to your written retirement plan or do you take more periodically? As always, be honest with yourself.
Do you have goals in mind? Are they written? Does your Financial advisor keep track of them? For some, it is paying for their children or grandchildren’s education. For others, it is getting retired and staying retired. Viktor Frankl, who wrote about survivors in Auschwitz, said the people who had something to live for, survived. Think about what gives your life meaning. These are the strong roots that can hold you steady during financial stormy nights.
Do your investments and risk tolerance match? Meaning, are you able to stomach a “stormy night” (we don’t know how long the night is, by the way) with the way your investments are currently allocated? We have tools that can simulate what a storm would look like for you. Think of this like a wind tunnel simulation to find out if your expectations match what is realistically possible. Without proper alignment, you may think you have a house of brick, when in fact, you have a house made of hay.
Will your expected return on average get you to where you want to go? You can’t expect to pick apples after planting strawberries. Just as you can’t expect to get high returns while investing in cash and other stable investments. Maybe you don’t need high average returns to meet your goals. Maybe you do. Really make sure that everything is in alignment for what you truly want, because you reap what you sow.
On the lighter side, we had a great time in Bulgaria. The food is so good there. Everything is so fresh and spoils so quickly. Maybe that is why their refrigerators are small. You have to get groceries every few days. One of my favorite dishes, which sounds gross, is fried sardines. They taste like bite size brim my dad and I used to catch in the Little Pee Dee River. By the way, homemade bread is around a quarter, but gasoline is around $5. Pictured below are some pictures of our trip.
Hope all is well with you and your family,
Jeremy Finger, CFP®, CIMA®, CRPC®, CPFA
Founder & CEO
Wealth Management Advisor
Finger Financial Five – 5 points in 5 minutes or less – is to provide you with a weekly shot of useful financial information. My intention is to share principles, so that you will have more clarity and peace, that help you make better financial decisions.
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Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor; DBA Riverbend Wealth Management.
This content is developed from sources believed to be providing accurate information and provided by Riverbend Wealth Management. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stratos Wealth Partners and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.