WEALTH MANAGEMENT EVOLVED
Posted on: August 24th, 2020

By: Randy Porzel

Western Springs Resident and Private Vista Advisor

I’m writing this on the first day of the 2nd quarter, and I’m “Sheltering in Place” while reviewing investment returns from the worst quarter since 1987. You may be surprised, but my phone is not ringing, and my e-mail box is up to date. Instead, I’ve spent the last month talking to my clients about their health and sanity. Why are my clients not panicking about their portfolio or worried about their retirement plan? Here’s why:

Drafting a Financial Plan is one aspect of Financial Planning, but not the solution. For example, hiring a personal trainer to put together a nutrition plan won’t make me skinny. Actively managing and adjusting the plan may – as long as wine can count towards my fruit intake.

For those that are building their careers and accumulating wealth (5+ years from retirement) – keep going! Your 401(k) contributions are buying into the market at discounted prices. If you have kids, start funding those 529 College Savings accounts. Now is also a great time to review your cash flow. How much cash should you have set aside to meet expenses if your income fell or paused for a few months? Set this amount aside in a savings account as your Emergency Fund.

If you’re approaching retirement within the next 5 years, start accumulating cash. We recommend holding 18-24 months of expenses in cash and/or short-term fixed income. This strategy allows you to manage through bear markets without selling your equities at depressed values. As we recover from this recent downturn, revisit your risk tolerance. Your advisor should help you determine how much risk you need to take to reach your goals. 

For those currently living on their portfolio, it’s times like this when diversification is your friend. In a properly diversified portfolio, you should be holding a mixture of bonds and equities. Now is the time to rely on your bonds to provide uninterrupted cash flow. Selling from your bonds while the market is down allows your equities to recover.

Whether the market is up or down, we suggest reviewing your financial plan regularly. Are you trending towards your savings goals? Do you need to rebalance your portfolio back to its target? Do you have enough insurance in case you were disabled or passed away? Is your Estate Plan up to date and address your current desires? A proper Financial Plan should address each of these while integrating together to support YOUR goals. But a Financial Plan is just that – a plan. Look to schedule quarterly touchpoints with your advisor to put the plan into action – that is Planning.

We’re living in interesting times, but the foundations of our economy are based on the assumption that our economy will recover and continue to grow. So, take a deep breath and remember – No matter where you are in this journey called life, understand that money is a means, not an end. Don’t forget to hug your loved ones and remember your own true meaning of happiness. 

 

The views expressed represent the opinions of Private Vista, LLC and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendations, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.

Additional information, including management fees and expenses, is provided on Private Vista, LLC’s Form ADV Part 2, which is available upon request or at the SEC’s Investment Adviser Public Disclosure site, https://www.adviserinfo.sec.gov/Firm/108084.

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