This is the 1st post in our Financial Planning blog series. And yes—we're talking about Christmas cards in January, on purpose.
I love receiving Christmas cards. They’re a favorite part of the holiday season for me. As those of you who do not receive cards from me should know, I do not like sending Christmas cards. It is a lot of work and takes time that I don’t typically budget into my December.
In fact, I am a little envious of the people who make it a point to reach out to family and friends simply to say hello and show that they were thinking of them. It must take a bit of planning on their part to make this happen.
One card I received this year was from a colleague. It was a great picture of his family with the inscription, “Here’s hoping 2019 is a positive year.”
At first, I thought, “Really? This is all you could come up with?” But as I read the card again, taking into account his sense of humor and that he’s also a financial advisor, I saw the message. The past year, 2018, was a negative year for most investors and was a less than stellar year in the market.
I spent a considerable amount of time in 2018, especially in the 4th quarter, calming client nerves and working to help them keep their vision of their future intact. For the clients who have engaged in our financial planning process, we took a deep look at their plan to review their goals. We also looked at their investment strategies and savings habits.
One of the tools I use for this review is a robust financial planning software called RightCapital. We ran “what if” scenarios to see what the stock market’s behavior in 2018 did to these clients’ financial goals. We looked at everything they were doing to see if it was still working in their favor. The goal in reviewing their plan was to reassure them that they could accomplish their goals on their timeline. Frequently, temporary dips in the market have no effect long-term on a financial plan.
During 2018’s 4th quarter, were you thinking, “Let’s take 2018 on the chin and forget about it?” Or maybe it had you panicking. Maybe you just hoped for a better year in 2019.
I think you can do more than just hope.
When it comes to financial goals, the answer is having a financial plan—one that encompasses a vision of who you want to be in the future, how you want to enjoy life, and where you want to be while doing it. A financial plan creates a clear path to hit that target.
Everyone needs a financial plan, just like everyone needs a will (which will be the subject of a future post). Written financial dreams and goals in an easy-to-review format are essential. The plan directs the steps you must take in order to attain the vision you have for your financial future. The plan gives guidance on how your money should be invested. For example, your plan can have a strategy of using a moderate-aggressive asset allocation until age 55, at which time you will scale back to moderate until you retire. If the plan shows that strategy as helping you accomplish your goals, you can avoid the emotional stress that comes from a volatile stock market. You can also avoid questioning yourself and your choice of advisor.
It is normal to think, “Should I do something different?” Then the inevitable follow-up question is, “What should I do?”
When your financial plan is in place, this answers your “What should I do?” question. The plan is what you review to make decisions. Especially when volatility throws you an emotional curve ball, review your plan. You can test your life event or issue against your financial plan. A financial planning software like RightCapital runs those scenarios and gives you the ability to make informed decisions based on data and facts—not emotion, or worse, panic.
Working with a financial planner to guide you through this process can be advantageous. A credentialed, experienced planner can save you time and money. They can create a plan that gets you to your vision of your financial future. Don’t go it alone.
Budget the time. Send the Christmas cards. Make that financial plan happen and be the envy of your friends. You owe it to yourself and your family.
To get a brief overview of RightCapital and how it may help you, click here.