If you are an investor, you have really been challenged by the downs and ups of the markets in the last few months. March’s dramatic drop in particular brought nothing but fear, and that’s completely natural. We want to help you to become a more successful investor, gain peace of mind about your investments, and achieve your life goals.
As CFPs, Scott & I have read a number of studies that have shown that for a given change in our portfolios, investors feel twice the emotional intensity in a decline as we do in an increase. In other words – for a 20% drop in account balance that causes us twice the emotional impact of a 20% gain. Why is this important? Because the fear of loss can defeat your investment goals.
Here is one common scenario with a market drop. By the time fear has taken over, you feel it necessary to do something- so you sell low- and you have then locked in your losses. When the market recovers and is higher, now you feel compelled to buy, and second guess your selling low.
So, what is the solution? Leave your emotions out of your investment decisions. Now if you can do that by yourself, you are truly exceptional. If not, work with a fiduciary to be your guide or coach. Together, you can identify your long-term goals, and create what we call and all weather portfolio, and the savings needed to make it work. And an all-weather portfolio is designed to decline less in a bad stock market than a portfolio holding only stocks or stock funds.
Since 2000, we’ve seen 3 periods of declines between 35 and 55 percent in equity markets. In each case, markets have recovered, and gone on to new highs. The markets will do this again-it’s just that nobody knows when. We help our clients achieve their goals, and reinforce the value of tenacity. Successful investing takes courage displayed over time to face and overcome our fears. Finally, if you feel like you are alone in this, feel free to give us a call. We are here to help.
The commentary is informational in nature and not intended to imply a specific strategy or course of action. Investment advice and recommendations are only provided according to each individual’s personal circumstances. Chancellor Wealth Management is an investment advisor firm registered pursuant to the laws of the state of Georgia. The firm is also registered to conduct business in the states of South Carolina and Texas. Copyright © 2020 Chancellor Wealth Management, All rights reserved.