I have had a few conversations with clients recently where they asked about market volatility and what we planned to do about it. After discussing for a few minutes, the clients would then say something to the effect of, “So, we are going to stay the course?”
“If you don’t know where you are going, any road will get you there.”
Lewis Carroll
Not exactly. Staying the course implies that there is a well-worn path, one that all wise investors will navigate through these turbulent times. It assumes that each investor had the right plan and the right investment allocation before the proverbial stuff hit the fan and that sticking with whatever they had is the right thing to do. Staying the course is the kind of advice that a talking head on TV can get away with. It is just bland enough to convey the right action (i.e., continuing on) without committing to a direction, which is the whole point: To get where we want to go.
determining your destination
Therein lies the problem. Too many investors don’t know where they are going. Staying the course means moving further down the path. But toward what, exactly? The better advice we can give is to stay your course. That one-word difference can provide a helpful spark of optimism for an investor who has done the work to prepare for the future. If you have a plan and know where you are going, this will remind you that your course is different from your neighbor and your co-worker. It also reminds you that information delivered via financial media is not advice for you. File it in the ‘good-to-know’ category and move on.
“We’re lost, but we’re making good time.”
Yogi Berra
This is the reassurance we want everyone in our community to have. Staying your course is the right thing to do now because this is your unique journey. For some, that may mean continuing to add money to their retirement accounts. For others, it could mean rebalancing to add risk little by little. For other more conservative investors, it may mean doing nothing at all because their defensiveness has insulated them from some volatility. Odds are, if you have worked with your advisor to make an honest assessment of your plan and your risk tolerance, the best advice right now is to stay your course.
Finding Your financial path
If you lack clarity on your financial path, hearing “stay your course” can be a wake-up call. Here are some questions to ask yourself if you don’t know what your course is:
- Do I know what I own and why in each of the investments in my various accounts?
- Do I know the best use of every new dollar that comes into my household? Does it go to savings? Investments? Debt?
- Do I know the risks that are unique to me and my family at this time? (The risk du jour may be more of an opportunity than a threat!)
“Staying your course” is simple advice, but it isn’t easy. The best way to stay on your financial path during turbulence is to set a destination worth reaching. Then, take proactive steps knowing that you are well-prepared for inevitable adversity.
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