Show Notes
You don't like to lose money. Nobody does. That's one reason it is so hard to stick to a long-term investment plan when we feel like we're getting punched in the face by the markets. Just like a boxer, it's natural to want step back and protect ourselves. This natural reaction, however, has caused most investors to underperform the very assets they invest in. In this episode, I discuss 7 steps to help you fight through a normal market correction. Invest Wisely: 7 Steps to Fighting Through a Market Correction
A 2014 Dalbar Study once again showed that average investors drastically underperform the very assets they invest in. Over the last 10 years the average investors, investing in a mix of stocks and bonds, had an average annual return of 2.6%. Over that same period, the S&P 500 had an average return of 7.4% and fixed income averaged 4.6%.
One of the biggest contributors to this is our natural reaction to run from pain. It's a strong instinct that I struggle with during every market downturn.
In this episode, I introduce 7 steps you can take to help fight through a market correction so you can invest wisely for retirement.
- STOP listening to financial media and market "experts." They only magnify your fear
- Learn the nature of the markets you invest in. Develop a clear understanding of how they work
- Determine your appetite and need for market risk. How much volatility can you stomach? How much market risk do you need to achieve your goals?
- Set a portfolio allocation that fits your needs.
- Rebalance it religiously to manage your risk and potential return goals
- Maintain enough cash reserves. This will help your long-term assets be focused on long-term objectives
- Revisit steps 1 thru 7 religiously to adjust as your life unfold.
Investing wisely is easy to understand. The hard part is sticking to a well thought out plan when you get punched in the face by a market correction.
Plan Well: Budgets That Work With Jim Munchbach
Recently I had the pleasure of talking with Jim Munchbach from
imakeyourmoneycount.com about how to find a budget that works for you. Jim is a Certified Financial Planner,
State Farm agent and instructor of Introduction to Personal Finance at the University of Houston.
Here are some of the topics we cover:
- Why it's important to track your spending
- Finding the truth about your financial behavior
- A budget that works, if you hate to budget
- How a budget helps you create free cash flow in order to save
- The value in learning to track your spending
- It's not the tool that is important, its the goal
- How to manager your cash flow like a business
- The law of spending and saving
Retirement Toolbox: Retirement Planning Worksheet
This worksheet may help you determine if your current retirement savings effort is on course or if you need to chart a new direction to help reach the retirement destination that you desire. To help you, I’ve added a new worksheet to the Retirement Toolbox titled
Retirement Planning Worksheet. Click Here to Access What is Retirement Answer Man?
A top retirement podcast. Roger Whitney, CFP®, CIMA®, CPWA®, RMA, guides you on how to actually do retirement well financially and personally. This retirement podcast isn't afraid to talk about the softer side of retirement. It will teach you how to retire with confidence. Two-time PLUTUS winner for best retirement podcast / blog and the 2019 winner for best financial planner blog. This retirement podcast covers how to create a paycheck, medicare, healthcare, Social Security, tax management in retirement as well as retirement travel and other non-financial issues you'll need to address to rock retirement. Retirement isn’t an age OR a financial number. It’s finding that balance between living well today and feeling confident about your retirement. It’s about gaining more freedom to pursue the life you want. Join the rock retirement community at www.rogerwhitney.com