What to Do During Uncertain Times: The Importance of Sticking to Your Financial Plan

Market volatility can be unsettling, especially when account values fluctuate. During times of uncertainty, you may feel tempted to tempted to react quickly or make changes based on emotions or headlines.

Fortunately, there’s a voice of reason in your corner when everything seems uncertain. Your financial professional is here to provide a well-designed plan with a framework for making thoughtful decisions rather than emotional ones.

Understanding Volatility

Markets never move in a straight line; they are ever-changing and evolving. Periods of growth are often flanked by spells of uncertainty, fluctuation, and decline. As your financial advisor, we consider short-term market movements while keeping your broader financial goals in mind.

A slew of factors can drive short-term fluctuations. The market responds to new economic data, changes in interest rates, inflation, geopolitical events and corporate earnings, among many other variables. The world is ever-changing, and the markets will always respond in tandem.

These periodic blips don’t mean your long-term financial goals have changed. As investors, we cannot control market dynamics, but we can control how to respond.

Avoid Making Emotional Decisions            

Fear and uncertainty can cause investors to make decisions based on short-term market movements. A sharp market decline may create the urge to sell investments and move to cash, while periods of robust market performance may bait investors into chasing investments that have recently performed well.

It’s tempting to be lured away from the strategy designed to support your long-term goals. This is where having a financial plan and a trusted financial advisor is valuable.

Rather than making decisions based solely on how the market is performing today, your financial advisor will evaluate how current events might affect your overall financial situation — and whether any action is necessary.

Going Back to the Plan

When markets ebb and flow, we always revisit and stay true to the foundation of your financial plan.

The initial investment strategy we build with you should reflect your financial goals, time horizon, income needs, risk tolerance, and overall financial situation.

Instead of asking “What should we do because the market is down?” we really want to ask, “Has anything changed about your, goals, circumstances, or financial needs?” If the answer to the latter is yes, this is when we can re-evaluate your long-term financial plan.

When Should You Make Changes to Your Plan?

Sticking to your financial plan means considering meaningful changes in your life. There are times when adjustments may be appropriate, and we want to know when big things are happening in your world.

We may want to revisit your plan if:

• Your retirement timeline changes

• You experience a significant life event such as marriage, divorce, birth of a child, or death of a loved one

• Your spending needs or financial goals change

• Your risk tolerance changes

Changes to your financial plan should be driven by meaningful changes in your personal world, not by market trends or what’s happening in the rest of the world.

Your Financial Plan Is Designed for More Than Good Markets

When devising your financial plan, don’t assume markets will always move upward. A sound financial strategy always considers a range of possible outcomes.

While a financial plan cannot eliminate investment risk or prevent market declines, it can provide a framework for evaluating the market conditions affecting your financial situation.

Periods of volatility are also an important reminder that a financial plan should be reviewed regularly. As markets shift and your life evolves, we can continue to evaluate whether today’s strategy remains aligned with tomorrow’s long-term goals.

Staying Focused on the Bigger Picture

Market volatility is much like airplane turbulence. An unsettling feeling, especially if it’s your first ride.

The more you experience it, you realize it’s part of the process. Highs and lows simply come with the territory of playing the investment game.

No one can predict exactly what markets will do next. However, having a personalized financial plan and regularly reviewing it with your advisor — who understands your goals and financial situation — can keep your decisions focused on what matters most: building a strategy that optimizes your long-term goals and the life you envision.

The material has been gathered from sources believed to be reliable, however West Michigan Advisors cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This article is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through West Michigan Advisors. Advisory services are only offered where West Michigan Advisors and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. Securities offered through Registered Representatives of Level Four, a registered broker dealer and Member of FINRA/SIPC