Since the recent election of President Trump, the market has experienced a nice move upward. As of writing this article, the Dow Jones Industrial Average, or simply the Dow, is up 16.82% since November 4, 2016, or 5.99% year to date.
So, now what? The market is positive, which is great. So, what should you be doing? Is it time to sit back, relax and be content? Quite the opposite actually. Now is a great time to review how things are going, and to make sure you are proactive regarding things you can control. Here are some questions every investor should be able to answer concerning their own account(s), or financial plan:
Do you know the expected return of your portfolio, after inflation? Most people I talk to about portfolio return are easily confused and don’t realize there is market return (what markets do all on their own) and investment return (simply put, what your account returns are). You should have a stated plan that details what your expected return is after inflation. If you don’t, how do you know if your portfolio is succeeding or failing?
What is the risk, or standard deviation, of your portfolio? Do you know how much risk you are taking to achieve the returns, or lack of returns, you experience? Are you taking uncompensated risk in your portfolio? Risk is a part of investing, and has to be there in order for returns to take place. Managing the desired level of risk is important to overall portfolio growth.
What are the total costs of your portfolio, both visible and invisible? Think of your costs as an iceberg. Most of the costs are hidden, or beneath the water. Very little costs are visible, or above the water. An example is your 401(k) plan – when you look at your statement, are the fees listed? If not, do you think the advisor is working for free? Absolutely not!
Do you have a game plan in place if something happens to you? This week I was saddened to hear that a friend of mine had passed away of a heart attack…at age forty-seven. It can happen at any time. Make sure you are prepared, and don’t leave a financial mess for your loved ones. Be proactive, and take the time to meet with your advisor to lay out a solid plan. It could be invaluable to your family.
I hope this helps, and if you want more info, feel free to give our Gallatin office a call at 615.461.8653, or check us out at paulwinkler.com. We can set up a free initial consultation to determine if our office can help you with your current situation.
Until next month,
Jonathan Walker, CFP®, RICP®
*Advisory services offered through Paul Winkler, Inc. (“PWI”), a Registered Investment Advisor. PWI does not provide tax or legal advice; please consult your tax or legal advisor regarding your particular situation. This information is provided for informational purposes only and should not be construed to be a solicitation for the purchase or sale of any securities.