As we near the end of another year it is always wise to review your financial situation – especially after a year like 2020! Leading Edge has created a checklist to help you evaluate your progress, maximize opportunities, and set goals for 2021. Take this opportunity to do a quick financial self-assessment. Did you meet your financial goals? Did you pay off the debts that you hoped to? Did you keep within your budget? If not, commit to making those changes for the upcoming year.
As always, we are here to help. Please reach out if we can help answer any questions or concerns. Schedule your free consultation today, 865-240-2292
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this document will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 12/23/2020 and are subject to change at any time due to the changes in market or economic conditions.
Not even Hollywood writers could have created a story like we lived out in2020.In this video, Charlie Mattingly and one of Leading Edge’s newest advisors, Rob Eklund,discuss what this year has taught us, howtobetterprepare in the future,andthoughts about the markets and economy going forward.
Leading Edge financial advisor Rob Eklund, aFirst Officer for a major airlineand a retired Air Force Pilot, reviewwhat investors can learn from mission planning in the Air Force and airlines.For example, how can we be proactive instead of reactive? Many times, people may remark how pilots need quick reactions to be successful. As Rob and I know, ifyou arefrequentlyreacting as a pilot,it’s a good indication you did notplansufficiently.We believe it’s the same withinvesting and retirement planning.
Although, it is to prepareprior to a recession or market downturn, there are many things we can do during the event itself. Vanguard posted the following graphic listingjust a few of the value-added strategies that are critical to consider during any market decline.
In addition to the checklist above from Vanguard, we believe there are ten essential principlesto help all of us remained focused and less stressed during the next market downturn or recession.
Embrace the efficiency of the markets in the long term.
In the short term,the stock marketreflects investor phycology (and many other unpredictable factors).However, over time, equity prices tend to represent the future cash flows of a business. We can all share in those future profits if we have the discipline to remain invested.
Don’t try to outguess the market.
Although there is some debate within the finance community on the exact level of impact on investment returns,most will agree that strategic asset allocation and the amount of time in the market (not market timing) have the most considerable influence on investor returns.
Resist chasing performance.
Do not select investments based on past returns. Funds that have outperformed in the past do not always persist as winners in the future. Past performance alone provides little insight into a mutual fund or ETFs ability to outperform in the future.
Let markets work for you.
The financial markets have historically rewarded long-term investors.We have the opportunity to earn an investment return that outpaces inflation by supplying capital to the companies we invest in. (I.e., stocks, mutual funds, exchange-traded funds)
Consider the drivers of returns.
Evidence shows that buying investments at a fair price (value factor), buying companies that demonstrate a consistent trend of profitability (profitability factor), and companies that tend to be smaller (small-cap premium)point to differences in expected future returns.
Practice smart diversification.
Diversification helps reduce risks that have no expected return. Global diversification can prove beneficial over the long term while reducing the short-term volatility of a portfolio.
Avoid market timing.
You never know which market segments will outperform from year to year. Time in the market is much more profitable than attempting to time the market.
Manage your emotions.
It’s challengingto differentiate the short-term ups and downs of the marketfromthe long-term returns needed to outpace inflation. In reality, themost significantrisk we face is losing purchasing powerover the long-term,during retirement, versus the risk of short-term losses in the market.
Look beyond the headlines.
There will ALWAYS be a news headline that could prevent you from investing in the stock market.The news headlines will either attempt to scare you out of the markets or lure you into the latest investing trend. Either strategy increases viewership,whichin turn sells more commercials.
Focus on what you can control.
As we mentioned at the beginning of the article, just like pilotsplan for their missions in greatdetail, we believe thorough planning is the best way to ensure a successfulinvesting experience plus a fulfilling and prosperous retirement.
Please don’t hesitate to call or email us anytime. We’d love to hear from you!
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 12/18/2020 and are subject to change at any time due to the changes in market or economic conditions.