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Financial Plan Commitment: Stick with your plan [Video]

by Rob Stoll, CFP®, CFA Financial Advisor & Chief Financial Officer / January 5, 2021

Financial Plan commitment or sticking with your plan can certainly be one of the hardest parts about investing your money because of the need to control your emotions.  Greed and fear can begin to take over and make the best investor out there make some investment mistakes they regret later.  Now, we are in an election year and there is a lot of emotion around that. In addition to the fact that we are in a social media age as well.  All these emotions get amplified.  

Financial Plan Commitment Temperature Gauge

So how can you take the temperature and check yourself to make sure you don’t make an emotional investment mistake?  I have four things I always like to tell people:

1. Make sure you get perspective. 

I am in my mid 40’s and was born at the end of the Vietnam war.  I have seen Regan assassination attempts, stock market crashes, two Iraq wars, the great financial crisis, the tech bubble, and now COVID. A lot of things happen over the course of our lifetime and it’s always good to take a step back and remember that even during all these terrible events things fix themselves and the stock market continues to move on.  So look at the big picture. Get some perspective.  Remember that even though it seems like we are always going through something negative it doesn’t mean we don’t come out on the other side okay. 

2. Make sure you focus on your time horizon.

It can be really easy to get wrapped up in what’s going on right now and make short term investment decisions for a long term goal.  If you are saving for retirement, and that goal isn’t for another 20 years then make sure you don’t get too short-term in your thinking relative to that long-term goal.  It makes sense to stay apprised of current events and review the recent history, such as reviewing how your investments are performing.

3. Adapt when things change. 

We have seen many changes in the last couple of years with tax laws.  Then with the election, there is speculation of more tax law change ahead.  It’s really hard  to predict what will happen in the future.  So we need to operate with the situation as it is and adapt our strategy as things change.  In the past four years we have adapted strategies for clients of ours to use opportunities available with the new tax cuts and jobs act.  If this changes ahead due to a new political regime then we will have to make additional changes.  You want to make sure you are flexible and adaptable to changing circumstances.  By keeping up with annual items like filing your tax return you will know if something needs to be adapted differently.  

4. Make sure you stick to your plan. 

In your retirement plan be sure to keep a set amount in stocks and a set amount in bonds so you have a well diversified portfolio. Remember your financial plan commitment and stick with that plan. you don’t have to make any radical changes; you don’t have to rewrite the book about what your plan is unless it’s needed.  Remain disciplined in how you execute it.  It doesn’t sound exciting at all particularly when everyone is yelling and screaming at each other.  It feels like you have to be doing something too.  But most of the time the best thing to do is to do nothing, boring is beautiful. 

If we can help you stay connected to your financial plan commitment please give us a call.  We are here to help you!

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Rob Stoll, CFP®, CFA Financial Advisor & Chief Financial Officer

Rob has over 20 years of experience in the financial services industry. Prior to joining Financial Design Studio in Deer Park, he spent nearly 20 years as an investment analyst serving large institutional clients, such as pension funds and endowments. He had also started his own financial planning firm in Barrington which was eventually merged into FDS.