The speed and breadth that information is exchanged has dramatically accelerated in recent years; a trend that will likely continue for the foreseeable future. In terms of investing and financial planning, the abundance of talking heads on the news, commercials, podcasts, print ads and beyond, whether by design or coincidence seem to present arguments on both sides of any matter relating to your finances and the well-being of your investments. If you look and listen long enough, it is likely that these ostensibly reputable sources present arguments for one tactic or outlook versus another, on diametrically opposed ends of a given spectrum.

With this considered, it is imperative to outline some baseline principles to adhere to as a result of the outside noise we are subjected to.

❖ Following a Detailed Financial Plan

The first pillar of success is creating a detailed financial plan to outline current investments, cash flows and expenses so that a plan can be devised to optimize these factors. Identifying both short and long term goals in terms of how your assets are managed establishes a concrete relationship with money, one in which “moving the goalposts” is not a factor at play, i.e. never fully understanding where the health of your financial plan stands. Identifying and quantifying benchmarks within a plan helps to alleviate general anxiety that you will outlive your money or not leave anything to your heirs.

❖ Saving and Investing Regularly

The immense power of compound interest that invested assets can earn is sometimes hard to grasp. As Investor Michael Batnick analygizes, “if I ask you to calculate 8+8+8+8+8+8+8+8+8 in your head, you can do it in a few seconds (it’s 72). If I ask you to calculate 8x8x8x8x8x8x8x8x8, your head will explode (it’s 134,217,728).” [1]

❖ Diversifying and Rebalancing are Crucial

Exposure to a broad range of sectors and geographies may reduce downside capture as sentiments change, rebalancing periodically. The goal is to establish an opportunistic, all-market, all-weather due diligence provider and portfolio manager. Through our investment and portfolio recommendations, we aim to avoid downside and capture upside. To this end, we are conservative when markets are tough and aggressive when they are rising. Though a very broad investment mandate, we believe this is the only way to effectively provide recommendations.” [2]

❖ Re-evaluating as time passes & needs change

As a given financial plan progresses through stages of implementation, risk tolerance and time horizon should change in lockstep in order to shift to changing needs. The goal of protecting principle and generating income generally moves to the forefront, whereas in the earlier stages, or more long-term oriented phase of a plan, capital appreciation is predominant. Additionally, for many individuals, insurance or annuities can be tools to supplement income and protect principle. [3]

Overall, committing to a financial plan subscribing to the pillars of regular investing and saving, diversification, and adaptability present a high likelihood for success in the long run. There is skill in practicing discipline to avoid being swayed by financial pundits, trends and gimmicks. Emotions and anxiety with markets and outlook will be presented along the way. Historically, six of the U.S. market’s 10 best days occurred within two weeks of its 10 worst days. [4] Investing for the long term and maintaining perspective along the way present the best case for successful investing and wealth management.

Disclosures:

The Financial Consultants at Vintage Wealth Advisors are registered representatives with, and securities offered through, LPL Financial, Member FINRA/SIPC. Investment advice and financial planning offered through Financial Advocates Investment Management, DBA Vintage Wealth Advisors, a registered investment advisor. Financial Advocates Investment Management, Vintage Wealth Advisors, and LPL Financial are separate entities.

1) CollaborativeFund The Freakishly Strong Base
2) LPL Research Strategic Asset Allocation Primer
3) LPL Research Benefits of Financial Planning Brochure
4) JPMorgan Asset Management Market Insights, Principles for Investing