What have we seen?
New concerns about the economy and investment markets heightened in the fourth quarter of 2018, marked by high-to-low drops of nearly 20% in the S&P 500. Of course, amplified by the media, this gave investors a jolt to their expectations.
Yet, volatility is a normal and expected part of investing for the long-term. Equity investing is a way for average investors to participate in the worldwide economy and investment markets. The compensation for the ups and downs of the markets is the excess returns over the long-term. Subsequently, these excess returns make it possible for our hard earned capital to grow and offset inflation to meet the higher costs of good and services over time.
What does it mean?
When the market goes down, it does not necessarily mean doom is ahead for the economy and investment markets. In fact, this is seldom the case, even in the short-term. As history shows, the results in the markets in January clearly show that investing is a long-term proposition and those who focus on the short-term get sidetracked and whipsawed into miserable outcomes.
This video will discuss aspects of the recent volatility and how that has played out in the past. Investing is a component of developing a strategy of creating and maintaining the financial security many desire. That said, it is imperative to recognize the role of other components in creating an overall wealth management strategy.
An example of this is having adequate cash reserves and insurance protection to meet sudden, unexpected expenses. Therefore, if an unexpected event happens that has not been adequately prepared for and coincides with a downdraft in the economy and investment markets, an investor may sell assets at exactly the wrong time. Properly planned, via cash reserves and protection, it is an inconvenience, not a catastrophe.
Robert Klosterman, CFP® is Founder of White Oaks Wealth Advisors, Inc., a fee-only wealth management firm, and its predecessor R.J. Klosterman & Co, Inc. Bob has been a Certified Financial Planner licensee since 1989. He has a clear vision for the future having worked in financial planning since 1975, and feels a strong need to provide people with expert and independent wealth advisory services. As a Certified Financial Planner and certificate holder for Family Wealth Advising, Bob’s expertise and guidance have helped to fuel the steady growth of the firm. Today, White Oaks Wealth Advisors boasts a talented staff of advisory professionals, hand-picked for their financial planning and wealth management knowledge as well as their dedication to client service.