Financial Planning

Top # Medicare Planning Mistakes and How to Avoid Them: A Guide for High-Net-Worth Clients

Top # Medicare Planning Mistakes and How to Avoid Them: A Guide for High-Net-Worth Clients

by | Mar 17, 2023 | Financial Advice, Financial Planning, Lifestyle

Linda had always been the picture of health. She ate well, exercised regularly, and never had any major health issues. So when she retired at the age of 65, she didn’t think much about long-term care. After all, why would she need it?

 

For the first few years of retirement, Linda enjoyed traveling, spending time with family and friends, and pursuing her hobbies. But then, she started to notice that she was having more trouble with everyday tasks. Her arthritis made it difficult to get around, and her memory wasn’t what it used to be.

 

Despite these challenges, Linda was determined to stay in her home as long as possible. She hired a part-time caregiver to help her with housekeeping and personal care, but she didn’t think much about the cost. After all, she had plenty of savings, and she assumed that Medicare would cover any medical expenses she might have.

 

But as Linda’s health continued to decline, her care needs became more complex. She needed help with bathing, dressing, and getting in and out of bed. She needed medication management and supervision to ensure that she didn’t wander away from home. And as her needs increased, so did the cost of her care.

 

Linda was shocked to discover that Medicare doesn’t cover long-term care. She had assumed that her savings would be enough to cover any costs, but she hadn’t counted on needing care for years on end. She had no long-term care insurance, and she hadn’t set aside enough money to pay for the care she needed.

 

As a result, Linda’s savings quickly dwindled. She had to sell her home to pay for her care, and she had to rely on Medicaid to cover some of her expenses. She was no longer able to afford the things that had brought her joy in retirement, like travel and hobbies. Instead, she spent her days in a small room in a nursing home, watching TV and waiting for visitors.

 

Linda’s story is a cautionary tale for anyone who thinks that long-term care is something they can worry about later. The truth is that none of us know what the future holds. Planning ahead for long-term care can be the difference between a comfortable retirement and financial ruin.

 

But, this is just one of the many common mistakes high net worth investors have made when planning for the Medicare piece of their retirement puzzle.

 

Don’t make a major Medicare planning mistake like Linda did. Start planning for your future today, and talk to a financial advisor about how you can protect your assets and ensure a secure retirement.

 

Mistake #1: Bottom of Form Not Understanding Medicare

 

One of the biggest mistakes high net worth clients make is not understanding the different parts of Medicare. Medicare is made up of several different parts, including Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage). It’s crucial to understand how each part works and what they cover to ensure you have the right coverage for your needs.

 

Mistake #2: Choosing the Wrong Medicare Plan

 

Choosing the wrong Medicare plan can be a costly mistake. You may be tempted to choose a plan with a lower premium, but this could result in higher out-of-pocket costs for medical expenses. On the other hand, choosing a plan with a higher premium could be a waste of money if you don’t need the additional coverage.

 

Mistake #3: Not Reviewing Medicare Coverage Annually

 

Your health needs can change from year to year, and so can your Medicare coverage needs. It’s important to review your coverage annually during the open enrollment period (October 15 to December 7) to ensure that you have the right coverage for your needs. Failing to do so can result in missed opportunities to save money or receive better coverage.

 

Mistake #4: Failing to Plan for Long-Term Care

 

Medicare does not cover long-term care, which can be a significant expense for high net worth individuals. Failing to plan ahead for these costs, either by purchasing long-term care insurance or setting aside savings, can be a costly mistake that depletes retirement savings.

 

Mistake #5: Not Working with a Financial Advisor to Avoid Medicare Planning Mistakes

 

Working with a financial advisor who specializes in Medicare planning can help high net worth individuals avoid costly mistakes. An advisor can help you understand the different parts of Medicare, choose the right plan for your needs, review your coverage annually, and plan for long-term care costs. By working with an advisor, you can have peace of mind knowing that your Medicare planning is in good hands.

 

“Working with a financial advisor has been a game-changer for my retirement planning. Before, I was making costly mistakes with Medicare and had no idea how to plan for long-term care costs. But my advisor has helped me navigate these challenges and ensure a financially secure retirement.” – John D., high net worth client

Next Steps

 

Medicare planning can be complicated and confusing, but it’s a crucial part of retirement planning for high-net-worth individuals. By avoiding common Medicare planning mistakes and working with a financial advisor who specializes in Medicare planning, you can ensure a financially secure retirement. Don’t wait until it’s too late to start planning. Schedule a call with Platt Wealth Management today to learn how we can help you avoid costly Medicare planning mistakes and achieve your retirement goals.

 

You can omit this or replace it with a real testimonial if you’d like.

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Didn’t Prepare for Your Taxes Very Well Last Year? Here’s What to Do Now

Didn’t Prepare for Your Taxes Very Well Last Year? Here’s What to Do Now

by | Mar 5, 2023 | Financial Advice, Financial Planning, Tax Strategies

Taxes are no fun. In fact, they might join root canals at the top of the list of “least favorite things to do with your time,” which is why many folks tend to wait until the last minute to deal with tax-prep related responsibilities.

 

While it feels great just to get them done and out of the way, you may have missed some things in haste that could have produced a better outcome or decreased the chance of errors. Luckily, it can be different this year. All it takes is some mindful choices, a little organization, and perhaps a financial advisor partner to see better outcomes in the future.

 

Check Your Tax Withholding for the Upcoming Year

 

Federal income tax is a pay-as-you-go-tax, which means you pay the tax as you earn income during the year. In order to determine how much you pay out of each paycheck, you are asked to adjust your withholding amount on your W-4. Filing status, number of withholding allowances claimed, and additional withholding all affect how much is withheld from each paycheck. One way to avoid a surprise tax bill at the end of the year is to make sure you aren’t withholding too little throughout the year. To check and change your withholding, you need to review and possibly complete a new Form W-4 and submit it to your employer.

 

Avoid Triggering Major Tax Events

 

One of the ways many folks end up with a large tax bill at the end of the year is by liquidating assets that carry hefty capital gains taxes on them. Just last year, we worked with a client who inherited a lump sum from her mother and liquidated a significant amount of money to put a down payment on a house. But, because she wasn’t working with any type of financial or tax advisor at the time, she wasn’t aware of the tax liability that would result from doing so.

 

A good rule of thumb to keep in mind is this: if it looks like income, it will be taxed. There are moves that we could have made with this client (if she had been working with us at the time) to help her avoid this huge tax bill in the first place, but let it just go to show that major money moves, more often than not, come with major tax consequences. Always consult with a financial advisor before receiving funds or liquidating assets for income.

 

Get Organized

 

Keeping all your important tax documents in one place can make it much easier to coordinate with your accountant or CPA when the time comes. Below is an annual checklist you can use to start getting organized today.

 

  • Gather Your Personal Information

 

Your best source for your personal information is last year’s tax returns. They have Social Security numbers for you, your spouse, and your dependents. Note any changes that need to be applied to this year’s returns, such as additional dependents or an address change. They’re also good as a starting point for identifying all your deductions and credits. If you’re starting with a new CPA or accountant to help you, they’ll require this to get started.

 

  • Gather Your Income Documents

 

W-2 forms. You should receive your W-2 form by January 31, either through the mail or electronically.

 

1099 forms. You should receive a 1099 form for various sources of income, including 1099-MISC for any contract work you’ve done, 1099-K for income received by third parties, such as PayPal, 1099-INT for interest earned, and 1099-DIV for any dividends received.

 

Letter 6419-Advanced Child Tax Credit. If you received advanced child tax credit payments, you need to compare the amount you received during 2021 with the amount you are allowed to claim on your 2021 return. If you received less than the amount you are eligible for, you can claim a credit for the remaining amount on your return. If you receive more than you’re eligible for, you may need to repay all or a portion of the excess amount.

 

  • Gather Records and Receipts for Deductions

 

Generally, you can only claim deductions if they can be documented. This can be the most time-consuming part of tax preparation, but it can be worth it if it means lowering your tax bill. Unless you think your total deductions will exceed the standard deduction ($12,550 for individuals or $25,100 for joint filers in 2021), you don’t have to worry about itemizing your deductions on Schedule A. If your total deductions were close to the standard deduction last year, it may be worth running through them this year to see if any additional deductions could bring you over the top.

 

One place to look for additional deductions is with sales taxes. While you don’t need to keep sales receipts for claiming the standard sales tax deduction (based on IRS formulas), any sales taxes paid on large items, such as a car, home renovation, appliances, can be claimed on top of that.

 

A note regarding charitable deductions: The charitable deduction limit increase allowed under the CARES Act has been extended to 2021 deductions. That means you can claim charitable giving deductions up to 100% of your Adjusted Gross Income (AGI) on cash donations.

 

As always, your charitable contributions must be documented to claim them.

 

In addition, the above-the-line deduction for charitable deductions has also been extended to 2021. So, if you don’t itemize, you can still claim up to $300 ($600 for joint filers) of charitable donations on your 1040 form.

 

Other above the line deductions that can be claimed even if you don’t itemize:

 

  • IRA contribution
  • Health savings account contributions
  • Self-employment expenses
  • Moving expenses for military members
  • Student loan interest payments
  • Educator expenses

 

  • Estimated Tax Payments

 

If you make federal estimated tax payments, have your record of payments handy. This will help you and/or your tax preparer ensure all the bases are covered.

 

The tax preparation checklist may apply to most taxpayers, but every situation is different. If you are a business owner, you will need to follow most of the same steps in preparing to file your Schedule C. By taking the time and effort to thoroughly prepare for filing, you’ll cut down on the time involved in completing your taxes online. If you file your taxes with a tax preparer, you’re likely to save on fees.

 

Work with a Professional Financial Advisor

 

When it comes to taxes, you don’t know what you don’t know. And with the ever-changing tax code, there is A TON of stuff you wouldn’t know if you weren’t in the thick of it every day. That’s why we always remind our clients that tax planning is an integral part of wealth planning, and should be top of mind year-round, not just during tax season.

 

At Platt Wealth Management, we work with clients not only on financial life planning and investment management, but tax strategy, as well. We also collaborate with their tax professionals to help ensure all the bases are covered year-round. That way, when tax time rolls around, we don’t encounter any costly surprises.

 

If this sounds like the type of partner you’d like to have in your corner, we encourage you to schedule a complimentary consultation over the phone or virtually via Go-to-Meeting. Or, you can call the office directly at 619.255.9554. We serve clients locally in San Diego, California and virtually throughout the country. We look forward to meeting you.

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Beyond the 401K: Where High Earners Should Invest to Save for Retirement

Beyond the 401K: Where High Earners Should Invest to Save for Retirement

by | Feb 15, 2023 | Financial Advice, Financial Planning, Investment Management

 

At the heart of it, saving for retirement isn’t terribly complicated. You know you need to max out your employer-sponsored 401K so you can receive your employer match and allow your investments the opportunity to grow tax-free. This is undoubtedly the best place to start. But if you’re a high earner, your 401K won’t be nearly enough to fund your retirement nest egg. So where do you invest next?

 

401K Limits Aren’t Enough

 

As we head into 2023, the elective deferral limit for anyone participating in a 401k plan will be $22,500 (an increase from $20,500 in 2022). With the catch-up contribution limit, that amount is $30,000 for those aged 50 and over. But for high earners, these annual limits won’t be enough to create the income you need to continue your current lifestyle in retirement.

 

So, to create that comfortable retirement you’ve always dreamed of, it’s time to put more of your money to work.

 

  • IRAs—Traditional and Roth

 

Individual Retirement Accounts (IRAs) are the natural next place to save as they are also tax advantaged. But, there are two types—traditional IRAs and Roth IRAs. The main difference in these two types of accounts is when the tax savings are captured. Traditional IRAs utilize pre-tax money for contributions and are taxed upon withdrawal in retirement, whereas Roth contributions are funded with post-tax dollars, but retirement withdrawals are tax-free.

 

However, Roths have no Required Minimum Distributions (RMDs). This type of account allows you to begin withdrawing money on your timeline and not the one that is determined by the IRS.

 

In 2023, you’ll be able to contribute up to $6,500 to both types of IRAs – $7,500 for those over 50.

 

Keep in mind, though, that Roth IRAs do have income limits:

 

  • For single filers: $138,000 to $153,000
  • For married couples filing jointly: $218,000 to $228,000
  • For married and filing separately: up to $129,000

 

Chances are, you probably earn too much to open a Roth IRA, but don’t worry. You can still take advantage of the Roth account benefits by converting traditional IRA fund into a Roth through an annual Roth Conversion.

 

  • Health Savings Account

 

After you’ve maxed out your 401K contribution, funded a traditional IRA and perhaps performed a Roth IRA conversion, you should turn your sights toward Health Savings Accounts. Their name might be throwing you for a loop, but HSAs can be great retirement saving vehicles. Here’s why.

 

Health Savings Accounts are heralded for their triple-tax advantage: they are funded with pre-tax dollars, experience tax-free growth, and qualifying medical expenses are covered with tax-free withdrawals. Considering the average American couple will spend $315,000 in out-of-pocket medical expenses in retirement, HSAs provide a way to save for them while also generating tax-free retirement income. Or, you can withdraw the funds and use them as you need (for non-medical related expenses) once you have reached age 65 and simply pay regular income tax on those withdrawals.

 

Keep in mind, only folks with a high-deductible health plan are eligible to open an HSA. However, if you lose or change away from your high-deductible plan, your HSA remains in your possession and the money can remain invested.

 

  • Brokerage Accounts, Real Estate, & Business Ventures

 

Once you have maxed out your tax-advantaged options, there are several options to choose from when it comes to investing for the future. If you’re comfortable with a little more risk, the following have proven great ways to supplement retirement income.

 

Brokerage Accounts (Taxable): Taxable brokerage accounts remain the most flexible for high earners with a substantial capacity to save. There are no income limits, annual contribution limits, and the assets can be accessed at any time for any reason. While you won’t benefit from any tax breaks with this account, you are in complete control.

 

Real Estate: There are multiple ways to invest in real estate. You can invest in residential properties to rent out, buy and flip houses, invest in a company that buys and flips houses, purchase commercial property to lease, or even invest in a Real Estate Investment Trust (REIT). This type of investing is typically best for investors with large cash reserves and an understanding of the real estate market.

 

Business Ventures: Since 2015, investors have been able to invest in startups and small businesses through brokers or crowdfunded campaigns. This can be an exciting option, but typically quite risky. You’ll want to make sure you do your due diligence and to familiarize yourself with what your investment entails and what your compensation options look like. Or, if you want to keep things closer to home, you can choose to invest in a friend of family member’s business. But, like with any large transaction, be sure you have the proper legal paperwork in place before handing over your money. This type of investment is attractive to those passionate about entrepreneurship and comfortable with risk.

 

Fill One Bucket, Then the Next

 

If you want to maintain or enhance your quality of life in retirement, it’s important that you put your money to work as efficiently as possible to keep from overpaying in taxes or missing out on potential income. We can help. If you’re ready to put your money to work, let’s chat. We can help you determine which savings vehicles will enable the happy, comfortable, and stress-free retirement you need.

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

The Pros and Cons of Retiring at Different Ages

The Pros and Cons of Retiring at Different Ages

by | Feb 1, 2023 | Financial Advice, Financial Planning, Investment Management, Lifestyle

While retirement sounds like an absolute dream, getting there can often feel a little stressful. Are you saving enough? How much do you really need? Will the market be favorable when you do? And, the big one: When can you actually retire?

 

Narrowing down the best time, or really the best age, for you to retire comes with a lot of considerations, especially what sort of lifestyle you want to have in retirement. So, we’ve put together this list of the pros and cons of retiring at different ages to help guide you to your ideal retirement window.

Retire Before Age 65

 

Retiring before age 65 is traditionally “early” and is what most of us would like to do. However, the Center for Retirement Research data shows that most Americans retire before or at age 65 with men retiring at an average age of 65 and women at an average age of 62. But is an “early retirement” right for you?

Pros

The two biggest advantages are that you are likely to have more energy and better health at a younger age. Plus, shifting from a full workday to either a part-time job, monetizing a hobby, or finding volunteer opportunities can help make the retirement transition easier.

Cons

Your retirement funds will also have to last longer if you retire early. Leaving behind your career and what are probably your highest earning years early will mean you could be leaving however many years of potential retirement savings (and potentially an employee match) behind. Plus, while you are eligible for Social Security at age 62, your monthly amount will be less if you don’t wait until you are old enough for your full benefit. And, finally, you will need to have a plan for health insurance since you won’t be able to get Medicare until age 65.

Retire Between Ages 66 and 70

 

Sixty-five has been viewed at the age of retirement since Social Security was established. However, as of 2022, Social Security views the full retirement age at 66 for those born between 1943 and 1959 and at the age 66 plus a few months depending on your exact birth year if you were born between 1955 and 1959. For anyone born after 1960, the full retirement age is 67.

Pros

Getting a few more years of savings and investing on top of waiting until you are eligible for both Medicare and your full Social Security benefit can make a huge difference in your finances. Private insurance premiums and prescription co-pays are not cheap after all. Plus, you paid into Social Security all of those years. So even if you have a pension and other retirement savings accounts, waiting just a few more years to get your Social Security benefits will ensure you get the full amount you are eligible for.

Cons

Well, you saw the data above. Most Americans aren’t waiting to age 66 to retire and most don’t want to. So waiting those extra years could feel like you’re back in school waiting for that last month of school to get over.

Retire at Age 70 and Older

 

If you’re in the group of folks who have to wait until 67 to get their full Social Security benefits, waiting just another couple years may not seem too bad. But is there anything to gain or lose?

Pros

Some folks just love their work and feel like they would be lost without it. And that’s OK! So continuing to work longer may be better for you mentally and emotionally if you fall into that category. Plus, if you wait until age 70 or older to start taking your Social Security benefits, your payout will be the highest on top of the extra years of retirement savings and investing. You may never have to worry about having enough money in retirement.

Cons

You will not be able to predict what your energy level or overall health will look like as you get older. Your health could start declining before you retire or after. You could be giving up the opportunities to travel or do other things you enjoy that you always planned to do in retirement if you wait. Even if your nest egg is larger, you could end up not having enough time to use it.

 

Finding the Right Answer

 

There is not really a right or wrong answer to when you should retire. Each person and your unique circumstances can change and so can the financial landscape. Many of our clients even benefit from doing a “test run” on their retirement plan before they actually leave work to see if this changes their perception of their need. Either way, we encourage you to lean on an expert to help guide you to a retirement plan that works best for you.

 

At Platt Wealth Management, we empower our clients to lead their best lives by providing them with the financial expertise they need. We help our families think through their goals, and even dreams they never thought possible. Then, we work together to put in place financial options that give them peace of mind. Schedule a call with our team today to discuss your opportunities.

 

 

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

5 Things to Consider about Cognitive Decline and Retirement

5 Things to Consider about Cognitive Decline and Retirement

by | Jan 23, 2023 | Business Advisor, Financial Advice, Financial Planning, Investment Management

No one wants to admit when getting older starts affecting them. It can a sore subject that hurts an individual’s sense of pride and confidence in their ability to care for themselves. Think about how many stories you’ve heard of adult children having to have a talk with their elderly parents about no longer driving because their eyesight has significantly deteriorated or how stubborn a grandparent can be about using their cane or walker even though they are clearly in pain and struggling.

 

But not all ailments are physical. What about mental atrophy? A recent study shows that 10% of Americans over 65 have dementia and 22% experience mild cognitive impairment. The risk gets worse as you age, research shows, with half of all people in their 80s showing at least some mild cognitive impairment, which likely still allows them to live alone, but can make it difficult to stay on top of all the information required to manage money.

 

Cognitive decline is a risk we don’t often associate with the money side of retirement but is something everyone ought to consider. Here’s why.

 

1. Retirement is Already Complex

 

Navigating the complexities of the stock market and living off your retirement savings, including taxes and sequence of return risk, is already a tenuous balancing act for the majority of DIY investors. Add cognitive decline to keeping up with required minimum distributions (RMDs), balancing a portfolio to avoid overexposure to risk, and remembering important deadlines and you’ve got enough to add stress to even the most experienced investor.

 

2. Missed Bills can be Disastrous

 

Today, keeping up with all of your financial obligations, such as monthly bills and donations, may be a nuisance, but add in cognitive issues and it can be a tall order. Miss the wrong bill, such as a Medicare payment, and you could be dealing with a more serious issue like a gap in health insurance coverage.

 

3. Get Family Involved Early

 

Everyone seems to have a horror story about extended family or a close friend’s family waiting too long to get important paperwork completed and then their loved one is too far gone to be legally able to sign. The headaches and legal work that situation creates can last months, if not years. So, talk to your loved ones now about the different “what if” scenarios that can arise, including cognitive decline, and get a financial power of attorney lined up who has the legal ability to act on your behalf should you need help even with just making sure your bills are paid and any other money management tasks are completed.

 

4. Scammers are Targeting You

 

Your favorite grandson is on the phone and he sounds desperate. He’s in huge trouble and needs you to send $50,000 to him right away. He does sound slightly different, but, hey, who wouldn’t in a time of extreme stress like this? And this is just one way hundreds of thousands of grandparents have been scammed out of money. Having an extra layer of protection, such as a trusted family member as a financial power of attorney, can help safeguard you and your assets from scams and even would-be hackers.

 

5. Lean on the Experts

 

Sometimes, you need an unbiased expert in your corner as another layer of protection and help, especially if your family can be a little overwhelming. Plus, there are plenty of great family relationships that money can complicate. A financial advisor can listen to your concerns and wishes and then help you build a plan to protect your assets in case of cognitive decline. They also will help guide you to the right steps and paperwork that needs to be completed for powers of attorney, insurance coverage, and more to make sure you are taken care of and your wishes are met.

 

Need Help?

 

Retirement should be enjoyable and carefree. Let us help you safeguard your assets and prepare for whatever the stock market or life throws your way.

 

 

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Top 3 Reasons You Should Stay Invested During These Volatile Markets

Top 3 Reasons You Should Stay Invested During These Volatile Markets

by | Dec 1, 2022 | Financial Advice, Financial Planning, Investment Management

Investing is one of those endeavors that requires a lot of trust—trust in the long-term return potential of the markets, trust in yourself if you are a DIY investor, or trust in your financial advisor if they manage your investments. Trust is easy to come by in a bull market when everything is looking up. But throw in volatility, and it can be harder to remain disciplined and keep trusting your long-term plan.

 

You know you must remain invested to allow your money to grow, but have moments when you wonder if you’d be better off moving some of it to cash or safer securities.  What should you do?

 

As financial experts, we want to help, so we’ve put together this list of the top three reasons you should stay invested during volatile markets.

 

 

1. Volatility Just Creates Blips

The stock market overall has grown by 3,000 times since 1950, and bear markets have only occurred every fifth year since World War II. So, when you look at the big picture, volatile markets have really just been small blips on a really long climb up.

 

The initial panic at the beginning of the COVID-19 pandemic serves as a good example of what can happen when individual investors make drastic changes during volatile periods. Vanguard research shows that 86% of self-directed investors who got out of the market between February 19, 2020, and May 31, 2020, not only locked in losses but also missed out on the market rebound.

 

While that period saw a 34% fall in the S&P 500, it also saw a subsequent 36% rise. Investing in the stock market traditionally has almost always paid off for those who have stayed patient and disciplined even during periods of extreme volatility.

 

 

2. There is No Good Time to Time the Market

We get it. When the market continues to go wild after many months, the temptation to try to time the market grows, whether you are more motivated by wanting to limit losses or taking advantage of buying low while you can.

 

Unfortunately, what happens the majority of the time when investors give into that temptation is that you end up selling low and re-buying at higher prices for an overall big net loss.

 

Remember all of the cliche sayings:

  • Time in the market always beats timing the market.
  • Investing is a marathon; not a sprint.
  • Play the long game.
  • Stay the course.
  • Keep your eye on the prize.

 

These are all cliches for a reason, because they are all true.

 

 

3. You Have a Diversified Portfolio for a Reason

Whether the market is currently fluctuating like crazy or not, going completely all-in on one kind of investment is super risky. That is why your portfolio is diversified and balanced to your unique risk level and time horizon at all times. This means you have a mix of investments that won’t all behave the same way when the market declines and your investments make sense for how close to retirement you are and how well your nerves can handle fluctuations.

 

Better yet, you should have an advisor to manage your portfolio if you don’t already. According to a study by Russell Investments, a financial advisor can increase your returns by 3.75%, and another study by Ramsey Solutions says that 44% of investors who partner with an advisor have $100,000 or more saved for retirement versus just 9% who do it by themselves.

 

An advisor can also help keep you on track and away from emotional investing decisions when FOMO and panic start to set in during incredibly volatile markets.

 

 

Schedule a Complimentary Consultation Call

At Platt Wealth Management, we empower our clients to lead their best lives by providing them with the financial expertise they need. This includes supporting you (not just your portfolio) through volatile markets. Of course, we are always working to reposition your portfolio to capture the upside in any market, but we are here to help put your mind at ease and guide you when the financial markets aren’t on the upward trend.

 

If you are a current client and are concerned about today’s market conditions, we encourage you to reach out. We are always here to answer your questions.

 

If you are not a current client but are looking for a financial advisory firm that puts you and your money first, we’d love the chance to chat. Simply schedule your complimentary introductory phone call here or call the office directly at 619-255-9554.

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

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