Do you recall reading the Charles Dickens (1812-1870) novel entitled A Tale of Two Cities? It was required reading for many of us when we were young. Can you remember the book’s most famous passage of all? The one that is equally relevant now as it was then? Well, here it is, in case you’ve forgotten it.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.”
In short, the period was so far like the times we find ourselves in right now – that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
On rereading the above quotation, we were inspired to remind you of a less lengthy expression about our times: This too shall pass. In other words – the best and worst of times will eventually go away.
“Noise” in the Marketplace
The underlying sentiment is that all sensible pre-retiree and retiree investors should take heart in the idea that in large part it’s just noise. Let’s focus on what we can we can control and ignore the “noise”.
1. Focus on the Fundamentals
During any period of market and political volatility the key is to focus on the fundamentals before taking irrational or drastic measures. Everyone’s future in regards to wealth preservation, whether they are a pre-retiree or retiree, depends on three things:
- How much you have saved and invested.
- How you continue to control your current spending.
- How competently your portfolio is diversified.
2. Focus on Saving & Investing
Financial planning is the key to staying afloat during turbulent times.
- Avoid making decisions based on emotion.
- A sudden downward market trend is not a signal to sell.
- Stay invested. Give your portfolio the chance to recover from what are often short term paper losses.
Our team is here to help you weather the storms.
3. Focus on Diversifying Your Portfolio
A diversified portfolio tends to minimize risks and losses precipitated by sudden market downturns. Review your existing investments and determine whether your funds have been allocated appropriately and are in line with your retirement goals. Revisit your portfolio with your advisor on a regular basis so that you can take advantage of a declining market and rebalance your portfolio accordingly.
4. Focus on Controlling Spending
There’s a direct connection between disciplined household money management and the process of investment, portfolio planning and long-term wealth accumulation. You may ask, “Why is that?”
The answer is simple. It’s because rigorous household budget planning is the foundation upon which discretionary dollars can be deployed to build longer-term financial assets. Earmark any extra funds or opt for payroll deposits to your retirement savings plans every month. That’s the basis for a growth-oriented portfolio. If you need help with that, consider using a personal finance app to assist your budget planning efforts.
And Finally…
It’s not rocket science. You don’t have to be a stock market guru to believe in certain durable truths:
- Fundamentals drive markets.
- Markets are resilient.
- When earnings grow, markets follow.
As we observed earlier: all material conditions, whether good or bad, are transient. History proves it.