Personal financial planning for a potential market crash
While investors continue to ride an unpredictable stock market, we’re getting a lot of questions about any additional personal financial planning steps our clients can take to protect existing assets. Here are a few key points to consider when assessing your financial readiness.
How comfortable are you with risk?
Every Good Life Asset Strategies financial plan begins with honest questions about your risk tolerance. Additionally, your risk capacity depends on many factors and may affect your risk tolerance as you implement growth strategies that build your net worth.
Risk tolerance is simply risk capacity in the context of your short- and long-term goals and the timelines associated with those goals. If you have 20 years until retirement, for example, you may be more comfortable with risk than someone who is counting the days to that well-earned next step. Depending on the financial goals you’ve set, and their time horizon, you may be more or less able to recover financially from more volatile investing choices.
Investment portfolios should be structured to minimize risk (conservative), accept a little risk (moderate), or maximize potential returns with the understanding that more risk is involved (aggressive). Only you and your personal financial planning advisor can determine which mix of stocks, bonds, and cash are best for your risk tolerance level.
Keep in mind that goal timelines advance and financial circumstances change. It’s a good idea to meet with your advisor periodically to assess any change to risk tolerance and update your portfolio.
What are your personal financial planning goals?
Financial planning is the process of allocating and building wealth to meet your financial goals. Popular goals include saving for a child or grandchild’s college education, paying off a mortgage, starting a business, and a well-funded retirement.
As you assess any big financial goals in your future, keep them SMART: specific, measurable, attainable, relevant, and time-bound.
Create a financial plan that accounts for goals with timelines for achieving them. Should your goals change, always contact your financial advisor to regroup and adjust your plan accordingly.
Take a breath and rely on trusted advisors
The most important point to remember is this: a good financial plan is proactive so that it doesn’t have to be reactive. Don’t panic, and trust your plan.
If you’re with Good Life Asset Strategies, your financial plan was customized with your risk comfort level, goals, timelines, and current needs in mind. Our advisors are fee-only fiduciaries who serve your best interests, and we’re always willing to discuss your personal financial planning concerns and assess what changes would be best for you.
If you’re not with Good Life, it’s time to contact us and start working on a plan so any fluctuations in the markets aren’t so worrisome. There’s no time like the present to get started.
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