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Wealth Management
Insights
submitted by Michael
Chorley, Senior Vice President, Private Wealth
Management,
Minnetonka Office of Robert W. Baird & Company
Despite recent rallies, you shouldn't count on
sustained market performance to get your
investment portfolio back on track.
August saw the Dow's longest string of up days
since 2007, and September didn't start out as
slowly for the markets as expected. These
and other signs sparked hope for investors that
the economic recovery is well underway.
However, most experts still predict a long,
perhaps multi-year recovery before the return of
the market highs like we saw in October of 2007.
Depending on how long you have to achieve your
financial goals, making the appropriate
adjustments to your savings and investment
strategy right now may be as critical to achieving
your goals as the market's performance in the
months ahead.
Assuming we'll eventually see highs to rival
those of late 2007 again, no one can say how long
that might take.
What You Should Know:
1. Don't be misled by recent rallies.
The chart above demonstrates how hard the
markets will have to work just to get back to
their levels from a year ago, which were
substantially lower than the same period in 2007.
Meanwhile, many economists believe the United
States could be a laggard as the global economy
emerges from recession. Assuming we'll
eventually see highs to rival those of 2007 again,
no one can say how long that might take. In
the meantime:
* Be wary of focusing too much on news of recent
stock market rallies, as this may paint a
distorted picture of how well the markets and your
portfolio are actually doing.
* It is essential to evaluate your current
portfolio values in light of your long-term goals
and investment needs rather than relative to their
recent lows.
2. Adapt your financial plan and revisit it
regularly.
Especially for investors at or near retirement
age, ignoring any of these issues mentioned above
could have a significant impact on your financial
goals and future lifestyle. However, even
investors with longer time horizons shouldn't take
their hands off the steering wheel as financial
market performance improves.
* Everyone should have a formalized financial plan
to reach long-term goals.
* Talk to your Financial Advisor about what's
important to you. A clear understanding of
your specific goals and timeframes will help to
identify the right investment strategies.
* Reacquire your financial bearings. It's
critical to know the exact value of your assets
and investments, where they're being held and how
it's all working -- or not working --
towards your goals.
* If gaps in your plan exist as a result of the
recent downturn, work with your Financial Advisor
to alter your goals or increase your savings.
And, once you've developed or updated your
financial plan, remember to revisit it regularly.
3. Lifestyle and goal flexibility can be key to
success.
Major life changes can and should impact your
long-term financial plans. For example, if
you're in or close to retirement, the recent
financial upheaval may require some lifestyle
changes if you want your assets and investment
income to last.
What Should You Do Now:
Don't count on market momentum to put your
financial plans back on track. The new
post-recession reality presents many new financial
challenges and investment opportunities.
Contact your Financial Advisor soon to formally
re-assess your financial goals and plan.
Your Advisor can help you identify the most
appropriate savings and investment strategies for
you in the period ahead. |
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