Rudyard Kipling perhaps had it right when he noted in his 1895 poem, “if you can keep your head when all about you are losing theirs and blaming it on you…”
For those of us who survived 2020, and especially in the field of financial management, Kipling’s words from 1895 ring especially true.
As we look back over the events of 2020, the value of cool heads and steady hands is one of the few elements of a tumultuous year that has been abundantly clear and unquestioningly true. But as we approach 2021, aspects of the pandemic are inching nearer to control, business and personal finances continue to reel for many.
As they do, here are some of the broader lessons that Money Concepts International, with a field of 600 financial specialists in 170 U.S. locations are taking to heart and advising its thousands of clients moving into 2021.
1. Create a Plan and Stick to It
Even in one of the world’s most tumultuous years, we can see that investors who’ve done their best to stay the course in their effectively designed plans are surprisingly still on track to meet their overall goals, despite wild fluctuations over the short-, intermediate-, and long-term.
Yes, the S&P 500 lost 34 percent of its value between February 19 and March 23 of 2020. But it then recovered entirely by August 18. Those who stayed in touch with their advisors and remained on plan have enjoyed overall continuity. But investors who’ve panicked during the year are more likely to have sold their sinking stocks during the massive decline, only to remain in cash or potentially need to buy them back after the recovery was already underway, thereby sacrificing a part (and maybe even a significant portion) of their investment. An investment plan that can weather all storms will almost always include a mixture of stocks, bonds, and cash consistent with the investor’s needs and investment risk tolerance. In good markets—and bad—investors must stick to that plan.
2. Have an Emergency Plan
The events of 2020 have underscored like few times before the value of a healthy emergency savings account. Your advisor can suggest the level of savings most appropriate for you. But the events of 2020 have shown that investors who were too light in cash were unfortunately prone to the need to liquidate other investments at depressed prices in the cases where money was needed to meet their interim needs.
In addition to a liquid savings account, consider the wisdom in establishing now, in a more stable time in the market, establishing a home equity line or a personal line of credit. Having a ready source of cash in place and easy to access when needed can serve as a source of emergency funds that is far more appealing than facing the need to disrupt a long-term investment plan when the going is tough.
3. Mind the Markets, With Care
It is helpful to remember that markets are leading (not lagging) indicators of the strength of the economy overall. We can note that when the markets began to decline in February 2020, the economy was humming, and employment was strong. However, those who were watching the rise of coronavirus internationally and envisioning the disruption to the supply chain and the strong possibility the virus would affect the U.S. population as well began selling heavily, and stock prices moved sharply down.
Conversely, however, investors noted the high amount of fiscal stimulus spending in March and April – and became even more encouraged as testing technology has strengthened, and the world has moved closer to global availability of effective vaccines. Once again, the economy is flowing. Even though many of the positive trends are based on economic figures that have yet to be manifested, the ability to read the signs of the overall market can give us confidence in the strength of our investment plans overall.
In summary, according to Denis Walsh, the president and CEO of Money Concepts, the key to successful financial planning and management in 2021 is to confer with qualified experts on the ways to keep a cool head when many of those who surround you are seemingly losing their minds.
At Money Concepts Capital Corp, our field of 600 highly qualified advisors work with every client to determine their ideal investment and financial goals. Our advisors will look at the time horizon, tolerance for risk and any investment restrictions the individual might have and use these findings to recommend and help to implement a specific strategy for every client the company serves. As an organization, the company supports nearly 20,000 clients with individual goals and requirements. Incoming accounts may launch with an investment of $10,000 to $1 million or more, with an eye to achieving the highest Committed Benevolent Interest (CBI) for every investment they make.
Wealth Management as a Career?
Wealth management is also an increasingly interesting option for those who may be interested in a financial services career. Particularly for those who are interested in serving a role with a company that is akin to an extended family, readers can learn more by visiting www.moneyconcepts.com.