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Helping You Stay Calm When the Market is NOT

Helping You Stay Calm, When the Market is NOT | Lineweaver Financial Group

Investing and going it alone is easy when the markets are up, as they were last year. But it’s a different game when markets are volatile, as they have been this year, or when markets are down, as they definitely will be at some point in the future. We help our clients put these different stages of the market cycle in perspective. Who helps you?

Our goal is the same as our clients; to develop a long term strategy and stay invested. That was easier said than done last quarter when the S & P 500 dropped 10% in 11 days and then again 5% a month later. And, this quarter promises just as much excitement.

Triggers for market volatility can come in many different shapes and sizes—policy uncertainty in Washington or Beijing, earnings reports, geopolitical unrest. And market swings can rattle even seasoned investors' nerves. But volatility is part and parcel of investing. So put such uncertain times to good use as a motivator to help ensure your investment strategy aligns with your long-term goals, timeline and stomach for risk.

Dramatic moves in the market may cause you to question your strategy and worry about your money. A natural reaction to that fear might be to reduce or eliminate any exposure to stocks, thinking it will stem further losses and calm your fears, but that may not make sense in the long run.

Instead of being worried by volatility, be prepared. A well-defined investing plan tailored to your goals and financial situation can help you be ready for the normal ups and downs of the market, and to take advantage of opportunities as they arise.

There may be a few actions that you can take while the markets are down, to help put you in a better position for the long term. For instance, if you have investments you are looking to sell, a downturn may provide the opportunity for tax-loss harvesting—when you sell an investment and realize a loss. That could help your tax planning.

Additionally, if you execute a Roth conversion—moving money from a traditional IRA or 401(k) to a Roth account—a downturn could help. Compared with a conversion when asset prices were higher, a conversion in a downturn may result in a lower tax bill for the same number of shares.

Finally, if the movement of the markets has changed your mix of large-cap, small-cap, foreign, and domestic stocks, or your mix of stocks, bonds, and cash, you may want to rebalance to get back to your plan. That could provide a disciplined approach that helps you take advantage of lower prices.

These strategies are complex, and you may not want to go it alone. Give my company a call and we can assist you. If you are nervous when the market goes down, you may not be in the right investments. Your time horizon, goals, and tolerance for risk are key factors in helping to ensure that you have an investing strategy that works for you.

For our clients at my company Lineweaver Wealth Advisors, we take it one step further with active management to adjust based on our analysts’ expectations of the best sectors for the following 6-12 months, making minor adjustments to the asset selection, but keeping the same general asset allocation and risk/reward profile.

Even if your time horizon is long enough to warrant an aggressive portfolio, you have to be comfortable with the short-term ups and downs you'll encounter. If watching your balances fluctuate is too nerve-racking for you, think about reevaluating your investment mix to find one that feels right.

But be wary of being too conservative, especially if you have a long time horizon, because strategies that are more conservative may not provide the growth potential you need to achieve your goals. Set realistic expectations too. That way, it may be easier to stick with your long-term investing strategy.

There may be a few actions that you can take while the markets are down, to help put you in a better position for the long term. For instance, if you have investments you are looking to sell, a downturn may provide the opportunity for tax-loss harvesting—when you sell an investment and realize a loss. That could help your tax planning.

Additionally, if you execute a Roth conversion—moving money from a traditional IRA or 401(k) to a Roth account—a downturn could help. Compared with a conversion when asset prices were higher, a conversion in a downturn may result in a lower tax bill for the same number of shares.

If you have questions, we can help. We offer a no-obligation first consultation. You can schedule your appointment today by calling us at 216.521.1711, emailing us at Quarterback@Lineweaver.net, or by clicking here.

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