Can Your Investment Plan Withstand the Stock Market? Ep #213

Think back to December 2019. Unemployment, interest rates, and inflation were historically low. Then what happened? A pandemic. By the end of March 2020, the S&P 500 had dropped nearly 20%.

By the end of the year, scientists had developed a vaccine and markets roared back. Facebook, Apple, Amazon, Netflix, and Google (FAANG) stocks soared. Bitcoin and crypto reached record highs, then they crashed. Meme stocks soared, then toppled. Inflation spiked to the highest levels most of us have ever experienced. Russia invaded Ukraine.

Could anyone have predicted any of this? Let us pretend that you had. What would you have done? Would you have stayed in the market if you had known the market would still see an average yearly return of 10%? It is impossible to out-guess the markets. So what should you do instead? Find out in this episode of Best in Wealth.

Outline of This Episode

• [1:10] Did you open your year-end statements?
• [3:10] If you could see the future, what would you do?
• [7:15] What we can learn from the past three years
• [8:39] Do you have a good investment plan?
• [12:16] Do not forget your obligation as a family steward

What we can learn from the past three years

We can expect that the markets will capture human ingenuity across thousands of publicly traded companies around the world. When news of a pandemic hit, the markets adjusted and prices went down. When uncertainty peaked in March 2020, investors demanded a higher return to jump into the market.

When news of a vaccine spread, the market adjusted expectations accordingly. But in between those times, the market was volatile. Making any changes was dangerous. The past three years were a good test of whether or not you had an investment plan that was sensible to stick with. So that begs the question, do you have a good investment plan?

Do you have a good investment plan?

Do you have an investment policy statement? Did you test the risk of your investments and what you could expect them to do? Were you comfortable with the downside of the risk that you were taking? Let us think about it.

Did you make any mistakes? Now is the time to prepare for the next time. The next three years will be just as uncertain. We just do not know what the uncertainties will be. Make sure your investment plan is sensible and based on financial science.

You also need to know your investment philosophy. Know that it is not based on opinion. Secondly, make sure your plan is realistic. Do not copy your friends. Your goals will be different. Your risk tolerance will be different. A plan is no good if you can not stick to it during hard times. Find a risk level that is right for you. So when you open up your end-of-the-year statement, you might not be happy, but you will not be surprised.

If you are not sure what is right for you, talk with a financial advisor. Feel free to reach out to me or check out the thousands of financial advisors on NAPFA.

Your obligation as a family steward

Let us develop and stick to plans that take us through market fluctuations to capture the long-term benefits of the stock market. The stock market is all about people developing better products and services to solve our problems. That leads to profit.

As family stewards, we have an obligation to stay in our seats. And if we can stay in our seats, we will be just fine. Do not follow an investment plan that has you swinging in and out of the market based on people’s opinions. Follow the science.

Resources Mentioned

• NAPFA

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Podcast Disclaimer:

The Best In Wealth Podcast is hosted by Scott Wellens. Scott Wellens is the principal at Fortress Planning Group. Fortress Planning Group is a registered investment advisory firm regulated by the Securities Act of Wisconsin in accordance and compliance with securities laws and regulations. Fortress Planning Group does not render or offer to render personalized investment or tax advice through the Best In Wealth Podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.

About the author, Scott Wellens

Scott Wellens, CFP® is an investment advisor and founder of Fortress Planning Group. After earning his Bachelor of Science degree from the University of Wisconsin-Oshkosh, Scott quickly ascended to become a Vice President of North American Sales at a major regional provider of telecommunications infrastructure. While financially successful in this role, Scott searched for ways to pursue his passion related to financial literacy and providing financial freedom for both his own family and others. During his search, Scott became curious about the significant gap he found in the financial services sector: he was unable to find a comprehensive financial planner that maintained a family stewardship lens without being attached to financial products. Scott decided to fill that gap by creating his own planning firm that maintains a strong passion for comprehensive, unbiased wealth planning that is genuinely client-centered.

Scott resides in Menomonee Falls, WI with his family. He is the father of three active and independent daughters who keep him on his toes. Scott is an active community member, serving on the Hamilton Education Foundation Board, serves as a Dave Ramsey Financial Peace facilitator and leads the All Pro Dad’s group at their local elementary school. Scott enjoys spending his free time visiting state parks with his family, reading, and watching the Milwaukee Bucks and the Green Bay Packers win ball games.

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