A Financial Planner’s Insight on a Changing Market
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The present economic climate seems to be trending toward a bear market for the first time in 11 years. Bear market? Don’t let that last sentence come off as a bearer of bad news… When the market shifts like this, it is not a time to worry; it is simply a good indicator that it’s time to take a look at your current portfolio and prepare for the future. Check out the insights of a financial planner below:
If you are in your 20s – 30s…
For this age group, a bear market may be a great opportunity to buy carefully chosen investments at a lower price. While some stocks that are currently down will bounce back, it is not guaranteed that all of them will. Following along with the needs of the average consumer right now would lead you to look into technology and telecommuting industries; these options may be good investments with potential to grow into the future.
If you have already built a bit of a portfolio and are concerned that you have suffered some losses, be confident that the market has a great chance of recovering. In your 20s and 30s you are still looking at 30+ years in the workforce and during that time there may be many market shifts. The important thing to remember is that right now it is still OK to be aggressive with your investments. Reflecting on market averages over time, you should see your portfolio even out during the length of your career regardless of these downturns.
If you are in your 40s – 50s…
As you get further into your career and potentially have a larger investment portfolio, a bear market may seem a little more off putting. Just remember, slow and steady wins the race. At this point, you may be ready to move from a more aggressive portfolio into one with a little more stability. It’s highly encouraged that you stay focused on the long term and remember that you still have 10+ years before retirement. In those years, a lot can change. One thing you do not want to do is be short sighted and sell at the bottom of a bear market. Keep in mind, after the market downturn in 2008 it took an average of 1 – 3 years for people to see their portfolios recover.
If you are a homeowner, now could be a great time to look at a potential refinance. Mortgage interest rates are still very low and a refinance could save you time and money on your loan. If you have built up a lot of equity in your home, you could look to a cash-out refinance to access some cash to pay off large expenses, such as college or medical expenses, rather than having to look for other savings or investment sources. Talk to your Cambria Mortgage team to see what options are available and to give you a free, no obligation consultation.
If you are 60 or older…
If you are nearing or have reached retirement age, chances are your portfolio has already been altered to accommodate your changing lifestyle. However, one thing to consider is ensuring you have enough cash on hand to cover approximately two years of expenses so that you do not need to dig into your investment portfolio at the bottom of a bear market. If you do need to access funds, consider tapping into your bonds and leaving your stocks alone.
Although it may be a scary thought, taking a look at your entire portfolio and assessing your losses may be just the thing to allay your fears. If your portfolio was dispersed between bonds and stocks, the bonds could have protected you more than you expected. Even if your losses are substantial, keep in mind that now is probably not the time to make any spur of the moment decisions. Markets will likely recover and your stocks should too. Taking all of your money out at a great loss could do more damage to your portfolio in the long run. Again, slow and steady wins the race!
Call Cambria Mortgage
Cambria Mortgage does not offer financial planning services, but our team may have some recommendations for industry professionals. Call Cambria Mortgage at 952-942-0110 or visit CambriaMortgage.com to get connected today. Our team of experts will provide personal, hometown service with sound advice and impeccable attention to detail at every step of the process.