Financial Planner 43551

Have You Seen The Market? Make Your Decision Now

In Articles, Income Planning, Investment Management, Weekly Articles by Adam Cufr

I interrupt our regularly scheduled programming to bring you this market update. The DOW (Dow Jones Industrial Average) hit 23,000. That’s a huge event. Of course, the news outlets are rushing to attract clicks and eyeballs by predicting the next big crash. For example, here’s a headline I read Thursday morning: Black Monday: Can a 1987-Style Market Crash Happen Again? I clicked on it, and I’ll bet many of you did – or would – too.

To respond to the headline’s question: yes. A stock market crash like that seen 30 years ago, or nine years ago, could absolutely happen again. The market’s history has a number of notable crashes, so to think that we’re immune is flawed logic. So this begs a question; what will you do about it?

My advice to you is to make your decision now. Decide now. Are you a long-term investor or aren’t you? Are you planning to see the next market decline through or would you be better off turning the dials back to a more conservative approach because you’re not sure you can endure another decline? And please understand that I’m not trying to make light of a market decline or your response to a decline, rather this is a great time to choose your strategy and stick with it. Waiting until emotions kick in is the very worst time to make a rational and prudent decision about who you are as an investor.

What does this mean to you?

  • Do you sleep better with a secure retirement income stream? Consider guaranteed income annuities and/or investing in dividend-paying stocks as well as a well-diversified bond strategy. (Tip: you’ll sometimes regret the lower growth of these strategies when the stock market is growing like crazy, but you’ll feel like the smartest person in the room when the stock market declines. Beware.)
  • If you can discipline yourself to remain focused on the big picture of your overall plan, you’ll do yourself a huge favor when the markets get dicey. If you struggle to remember that your Social Security, pension, and annuity income are the conservative (safer) part of your overall portfolio, then you’ll see your market-based investments out of context. That will cause you more heartburn when the market drops. These differing parts of your plan work together for your greater good.
  • If you’re going to lose sleep during a market decline, consider staying employed a bit longer, or pursue a part-time business or job to supplement your income. The security that comes from keeping those options open cannot be overstated. In other words, don’t burn all of your paid-employment bridges until you’re really ready to do so.

I’ll state it again. If you’re going to subject yourself to the noise of the headlines predicting the next historic market crash, please make your decision now. Get your planning house in order and your investing strategy clear in your mind and your spouse’s. That’s the best antidote to what may – or may not – be on the horizon.

Oh by the way, the 1987 crash saw the DOW climb back to surpass the pre-crash high in almost exactly two years. And the value of the DOW at that time? 2,734.

All the best,
Adam Cufr Signature

Adam Cufr, RICP®


Adam Cufr, RICP® (Retirement Income Certified Professional®) is a financial advisor and founding principal of Fourth Dimension Financial Group, LLC providing personal finance and retirement planning services. Adam is a Columnist for Retirement Advisor Magazine. He is also a sought-after media commentator and thought leader. Adam was named one of The 20 Most Creative People In Insurance in 2015 and is a columnist for Retirement Advisor Magazine and the author of Off the Record – Secrets to Building a Successful Retirement and a Lasting Legacy.

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