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Matt Chancey's Blog > Is Your Financial Plan Ready For Anything?

Is Your Financial Plan Ready For Anything?

2/27/2018 9:56:10 PM by Morgan Wendlandt Edited for Matt Chancey Leave a Comment
There has been endless speculation, especially of late, on what is happening in the markets. Anyone who tells you that they know for certain what the future holds, is, well, a fool. That's not to say that there aren't indications, historical patterns, risk triggers that can tip us off on possibilities moving forward, but all in all, we are all along for something of a ride.

This is why it's more important than ever to take a good hard look at your financial situation, your portfolio, and your future goals, and determine whether you are prepared for whatever is to come. Specifically, there are a few different aspects of your plan you should check in on.

Take a Careful Look at How Your Assets are Allocated

The way your assets are allocated right now matters, and that matters even more as you get closer to retirement. When you're young and just starting out it's less important, although still valuable, because you have a lot of time to make adjustments. As you age, though, you'll have less time to make course corrections if you see that you're off track.

Ideally, you want to look at your asset allocation fairly frequently, and determine if you need to make changes to continue to follow the plan that you set out for yourself -- or that your financial advisor has helped you create. Younger people typically have more assets in higher-risk investments, while older people move toward portfolios that are more conservative. Doing that can make retirement funds safer, and lower the risk of losing them.

Be Guided By Your Plan's Reaction to Recent Downturns
If there has been a recent downturn in the market, take a look at your plan and how it was affected. Depending on where you have your investment dollars, the downturn may not have affected you much, or even at all. But if you had your assets distributed differently, you might have found that your plan took a big hit. If you got through the downturn with little to no damage, that could be an indication that your plan is set up properly and is working to protect you from economic issues.

If you took a significant hit during a recent downturn, though, your plan may not be working for you the way it should be. Instead, you may have too much of your money in high-risk assets, or you may have a mix that isn't going to be helpful to you in the long run. With that in mind, it could be time to make changes to the plan you've created, so you can reduce your risk and keep your retirement dollars safer and better protected for the future.

Look at Setbacks and How They Could Affect Your Future

Setbacks that you've encountered can affect your future. But it's also very important to look at what setbacks could occur moving forward, and how those would potentially affect the future you've set out for yourself. By taking a look at the potential setbacks as well as actual ones, you can get a better picture of your overall portfolio design. In short, that helps you see what you can do, what you should do, and what you would do, depending on what happens with the market. Having this vision allows you to adjust and recover more quickly if a setback does occur, and you may also be able to avoid some setbacks by proactively making changes before they happen.

Decide on Your Best Move Going Forward

With all the information you've collected about downturns, setbacks, and asset allocation, it's time to make a move -- or not. Your best move could be to not make a move at all, and to leave everything just the way it is. If that's the case, it shows that your current plan is working well and that adjustments aren't necessary. If your plan didn’t shine through your review, though, you need to make some changes, and correct the future path. Make sure you work with your financial advisor to make any needed adjustments sooner rather than later.

Knowing that there's a problem with your is the easy part, taking action to correct it is where most people stall. Part of your financial plan being "prepared for anything", is understanding that "anything" can happen tomorrow. Is your financial plan ready?

This content created by Matt Chancey in conjunction with Fusion Capital Management.

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