For those who watched the stock market in 2020, it was a year that included a very rocky ride but ended with an overall positive return. The team at Marshall Financial Group believes in working in an intentional manner using planning and sound investment strategy to help clients meet their long-term financial goals. Last year’s unexpected turns reconfirmed four core lessons about investing:
You Need a Plan
There is an old adage that says, "If you don't know where you are going, any road will get you there.” The reality in investing is, if you don’t know where you are going, it will be difficult to find your way, especially during challenging market cycles. Understanding what is most important to you is crucial in developing a plan to meet your goals. That’s why one of the first things we discuss and develop with our clients at Marshall Financial Group is an understanding of your current situation and goals. Each individual and family are unique in setting priorities and can have different definitions of success. Thoughtful, comprehensive planning takes these values and goals and outlines a path to achieve them. This plan provides the foundation for our investment strategy.
Wouldn’t it be nice to have a crystal ball and see the future? There are many so-called “experts” who are more than willing to give you advice on anything from improving your home, to raising your children, to writing your will or to investing your portfolio (just to name a few). In fact, you can find predictions today that sound very convincing to support almost any future outcome – regardless of the realistic possibility of the event coming to fruition. These opinions can lead you to believe the “loudest voice” or the “idea heard most often” is correct. When it comes to the financial markets, many people will make predictions about what they believe will happen. In our years of experience, we know that no one has a crystal ball and we can’t see the future. Instead, we believe that there is a strong argument for following sound, long term investing principles that have been proven over time to lead to the greatest results for investors.
Put Your Retirement Planning On Autopilot
Another long term investing principle is to put your retirement funds on autopilot. During your working years, automatic investing allows you to invest equal dollar amounts periodically over time at varying market levels. When you put money into a 401(k) or other retirement plan through a payroll deduction, you are creating a systematic investment plan where the investment will occur at intervals when the market is up and also at times when the market is down. This periodic investing allows for dollar cost averaging, which can enhance the performance of your investments by creating an overall lower average cost basis.
Automatic retirement planning does not need to end once you stop working. During your retirement years, a systematic withdrawal plan can help achieve a steady income stream from investments. This allows for continued cash flow management and budgeting to achieve overall goals and provide longevity to the planning process.
It's Not Too Late To Invest In Stocks
The market has recently achieved new record highs, leading some to assume that they have missed their opportunity to buy into a bull market. We recognize that although the market indexes have reached new highs, there is no way to predict future market movements with certainty. As Anthony Pugliese pointed out in his year-end recap, the most recent returns have been driven by a fairly narrow segment of the overall market while other segments of the market did not return nearly as well in 2020. The expansion of the COVID vaccination program along with additional stimulus and a return to unrestricted economic activity could offer potential opportunities for future market growth. Investors can remain optimistic regarding gains in stocks when looking towards long-term investment goals rather than short-term payoffs.
Marshall Financial Group is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.