[vc_row top=”20px” bottom=”20px”][vc_column][vc_single_image image=”12465″ img_size=”Full” alignment=”center”][vc_row_inner][vc_column_inner][vc_column_text]By Bob Barber, CWS®, CKA®
Initial Investment Year 1
($100,000 invested all in one objective for 20 years)
$100,000 grows at 5% to = $265,330
Initial investment Year 1
($100,000 diversified in 5 different objectives for 20 years)
Aggressive Growth: $20,000 grows at 11%: $161,246
Growth: $20,000 grows at 9%: $112,088
Moderate/Balanced: $20,000 grows at 5%: $53,066
Conservative: $20,000 grows at 3.5%: $39,796
Ultra Conservative: $20,000 grows at 2%: $29,719
* TOTAL: $395,915
* NEARLY 50% more in a diversified portfolio
“Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” Ecclesiastes 11:2
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[vc_row top=”20px” bottom=”20px”][vc_column][vc_single_image image=”12464″ img_size=”Full” alignment=”center”][vc_row_inner][vc_column_inner][vc_column_text]By Bob Barber, CWS®, CKA®
The only guarantee in the stock market is that it will have ups and downs. This is true in any market, not just the stock market. So what should you ask yourself when the markets are in a downward trend? Take a look through the following seven questions to help you weather the storm:
- Will I need everything in my diversified investment portfolio in the next 1 to 3 years to live on?
- Do I have enough funds that are NOT in stocks and equities to last me for the next 3 to 5 years to live on while waiting for the stock portion of my portfolio to recover? Note: A moderate portfolio has as much as 40% to 60% in fixed income – that you can draw from – which allows the stock market portion of the portfolio to recover over time.
- Am I smart enough to perfectly time the market by getting out at the perfect time and getting back in at the perfect time? Note: just missing 3-5 days of positive market returns in a month can affect overall performance dramatically.
- Do I believe every day things I use and am invested in will no longer be needed? i.e. technology, healthcare, medicine, utilities, gas, transportation, food, shelter, clothing companies, etc.
- Will I allow “short-term thinking” to get in the way of long-term success?
- When the markets are down shouldn’t I look at it as a buying opportunity instead of a selling one?
- Do great investors like Warren Buffet go with the crowd and run away from the markets when they are correcting, or buy stocks at lower prices?
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[vc_row top=”20px” bottom=”20px”][vc_column][vc_single_image image=”12463″ img_size=”Full” alignment=”center”][vc_row_inner][vc_column_inner][vc_column_text]By Bob Barber, CWS®, CKA®
“Know well the condition of your flocks, and give attention to your herds, for riches do not last forever; and does a crown endure to all generations?” Proverbs 27:23-27
During a Bear market, it is very important to update your Financial Plan to see how it is handling the stress. When planning is done during bull markets we always compensate for bear markets that are inevitable by planning with overall returns that are 30-40% lower than normal. It’s kind of like running an engine at a very high-stress level in a factory to see if it can handle the heat in the real elements, but nothing is like the real thing.
So far, every financial plan we have updated recently has not been affected in the long term by the bear market we are presently in, but I still believe it’s always a good idea for a checkup. The eMoney financial planning system we use updates all plans daily with new values so we can run a test in seconds. A 15-minute phone call is all it takes for a quick checkup to see if anything needs to be adjusted to your financial plan.
A client just a few weeks ago asked with all the inflation if there was any way that they could withdraw a little more from their portfolio to compensate. I ran the numbers, and the answer was yes. They were relieved and surprised to hear this with the bear market we are presently in, but we were prepared for them.
Set up your appointment now to:
> Plan Forward
> Update
> Compensate If Necessary
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By Bob Barber
Over the past few years, stocks and bonds have seen a tremendous amount of day-to-day and month-to-month volatility. Volatility is the price an investor has to be willing to pay if they want long term growth, but many investors don’t realize, or forget this, when they actually experience volatility in their portfolio. Typically over time, the lower the volatility, the lower the return, and the higher the volatility, the higher the return.
We are now, once again, in a time of extreme volatility. One month your statement shows your account value is up, the next month it shows the value is down. Sometimes, this volatility can go on for several years. In the early 1970’s, the markets did this for 4-5 years before rallying for the next 7-8 years. I have a chart in my office showing all the different markets over 90 years and the many times the markets have gone sideways for 3-4 years in a row. I’m glad I get to look at this chart daily to remind me that what we are experiencing today is normal according to long term history. Those who threw in the towel during a sideways trend have always missed out on a following major rally in the markets for the next 4-5 years or longer.
Control What You Can, Especially Your Emotions
For many, with volatility comes stress. One of the ways to control your emotions during volatile markets is by working with volatility instead of against it! When markets are down, look at it as a buying opportunity just like you do when something goes “on sale” at the local department store. In a sideways market like we have been experiencing for some time now, this is a great opportunity to accumulate as many shares of good companies’ stocks as you can while they are flat or down. Then, when the markets rally someday, you will have bought at lower prices.
This is exactly the strategy Warren Buffett has been using for years, and he is one of the wealthiest men in the world. If you watch him, he always buys stocks during major dips when everyone else is following their emotions and getting out.
* Past performance is no guarantee of future results.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row top=”20px” bottom=”10px”][vc_column][vc_column_text css=”.vc_custom_1467298797615{padding-bottom: 25px !important;}”]
Click below to read other articles from the Christian Financial Advisors® July 2016 Newsletter
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Family and Money
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Online Security
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The Brexit Vote
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