We Had An Accident Show 69

Our weekend was full of hard work! We had a truckload of concrete pavers to put out to make Amelia (pictured below) a place for her playhouse. Thankfully, we had near perfect weather for the heavy lifting, and now we have a place for Amelia to use her toddler energy. If you ever want a human example of the Energizer Bunny, visit our house!
Amelia in her play house
Recently, Mallory, my wife, was running errands and was making a right turn when BANG! The lady behind her ran into the back of her Mallory’s car. Fortunately, neither of the ladies were injured and as it turned out, it was a minor bump up.
Amelia wasn’t in the car at the time, but her car seat was. It’s recommended by car seat manufactures that if there is any impact to a vehicle that the car seat be replaced. It’s similar to using a helmet. If the helmet is dropped or damaged, it may impair the device’s ability to fully protect in another accident. It’s better to be safe than sorry, as the saying goes.
All through life, we create these safety nets around what we do. Even if the likelihood of problems is small, we do our best to prepare for a worst-case scenario. That’s why we put on our seatbelt when we drive or go the doctor for a yearly check up when everything appears to be fine with our health.
Have you created a safety net with your retirement savings?
We’re unique, because most advisors would not speak in these terms. If the advisors maximize your risk, it normally maximizes their pay. But we believe we’re called to inform people to make educated decisions and equip retirees in order for them to be able to avoid many of the pitfalls that stand between them and a successful retirement.
Michael Wilson (pictured below) is a strategist for Morgan Stanley. His firm is calling for a twenty percent drop in the near term for the market. “He sees earnings revisions from American corporations ‘and higher frequency macro data pointing to a decelerating economy, amid demand pull forward, supply chain issues and margin pressure; which he forecasts could lead to a 20% drop, a near-term outcome, in a research note dated Sept. 20th.”
Speculation may conclude that the bear market could turn out to be worse. We never hope for this, because most all investors are negatively impacted by a down market in one way or another. The point to note is that we are not helpless. We can take steps to create a safety net around our portfolio.
Bloomberg ran a recent article that said, “When the story of this era in financial markets is written, it will be said that many investors were overtaken with fanciful notions of money growing to the moon, leading them to make costly mistakes that could have been avoided with simple steps to safeguard and grow their savings. But this era is not over yet, and it’s not too late to get on the smart side of history.”
Graph from Bloomberg
When there hasn’t been a major problem in the stock market in a decade, people tend to forget what may happen. The article continued, “Expectations about what a diversified portfolio can achieve have also become silly. In its latest survey of individual investors, French lender Natixis SA reported that U.S. investors expect their portfolios to generate a long-term return of 17.5% a year after inflation, a big jump from the already unrealistic 10.9% they expected in Natixis’s 2019 survey.” The old adage, “pigs get feed and hogs get slaughtered” seems appropriate.
Remember the S&P 500 from 1957 to 2018 has earned roughly eight percent per year, but many of our older clients remember retiring during the “Lost Decade” (2000–2010), and they acutely understand that the timing of market corrections can be problematic for retirement aspirations.
Market corrections the five years before and after you retire may have lasting impacts on your retirement income. “If there’s a downturn early on, it can derail a whole retirement plan,” said Wade Pfau, a professor of retirement income at the American College of Financial Services.
There are a few ways to create safety nets around your retirement portfolio. We always want to keep six months of bill paying money in our savings account. After that safety net, there are allocations you can make with your money that carry less risk or no investment risk at all. The suitability of these strategies will vary from person to person.
It’s important to know what all your options are, because if you don’t, how can you make educated decisions? I’d be happy to schedule a 15-minute call with you to talk through all of your options. You may call our office at 864.641.7955.
Until next week,
David C. Treece,
Financial Advisor

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