A Fish Out of Water
As most of my readers know, I live out in the boondocks. A traffic jam around here is an Amish buggy with two cars behind it. Stop signs are considered suggestions and used to determine who goes first on the rare occasion two vehicles meet at an intersection at the same time and neither stops.
Last week, I spent most of my time in Des Moines as a visitor at one of the hospitals. Des Moines is not a big city, but compared to Drakesville, it is huge. I spent a fair amount of time getting on the wrong streets going to and from the hospital. I decided it would be in my best interest to obey most of the traffic laws. People in Des Moines drive with a determination as though they have someplace important to
go on a set timeline. Getting around the city, though difficult with random one way streets, was nothing compared to getting around in the hospital. The hospital has been built over a number of decades on a side hill with buildings connected by tunnels, skywalks, and concourses. There were elevators that did not go to the floor where I needed to be.
There were hallways that started on one floor and ended on another. I only needed to learn three things. How to find the front door, the cafeteria, and of course, my wife. There were times I was sure I would starve to death before I found the dining room. I stopped one time and got a snack from a vending machine, sure I was not going to find the cafeteria. I was to the point; I could go from the front door to my wife’s room without getting lost when they moved her. A person can always stop and ask an employee for directions, but I did run into a couple of them that were as confused as me. It took me a few days, but I finally found a solution.
Out in the timber around here, or
even in the mountains while hunting, I can find my way around with ease. A person can look at the position of the sun during the day and the stars at night. Moss grows on the north side of trees and streams flow downhill. Inside buildings, all these are taken away. After spending hours lost inside of the hospital, I decided the easiest way to find my way around was to go outside. To get to the cafeteria, all I had to do was exit the front door, take a right and walk about one block, take another right and walk another block. Being outside, I could tell where I was going and the distance was anywhere from a few blocks to several miles shorter, counting unplanned routes.
Happily, I was able to find the vehicle, my wife, and the front door at the time we were able to leave the hospital. We made a beeline south, directly for the boondocks and home. All is well now, and I no longer feel like a fish out of water. I do not have to worry about traffic or wandering aimlessly inside a strange and disorganized hospital building.
Will You Spend Financial Resolutions for the New Year
Investment markets are in a challenging period in which large swaths of the stock and bond market have lost value. You may have noticed the impact of this on your own workplace retirement savings plans, such as 401(k) or 403(b) accounts.
While watching the value of your portfolio drop is never easy, investors must understand that markets can be volatile over short periods. Variable investments like stocks and bonds don’t move in a straight line – and occasional cooldowns are inevitable. It’s also worth remembering that if you’ve been investing in your workplace retirement plan for some time, it’s likely you benefited from strong markets in the historic bull run that followed the 2008 recession. Here is some more perspective to keep in mind:
Sticking with the plan It isn’t unusual to question your investment strategy when markets aren’t working in your favor. Consider the two key reasons why you shouldn’t be concerned by volatile, short-term, market performance in your retirement account:
1. You are investing for the long term. Your concern is less about what the markets do today and tomorrow than how your investments perform between now and the time you retire. If you have a long time horizon before retirement and faith in the quality of your investment choices, you should be able to ride out the short-term market swings.
2. You are investing regularly over time. Periods of market volatility can work in your favor. When investments drop in price, you are able to purchase more shares than you would have at a more elevated price. Assuming the investment recovers and grows over time, that can be beneficial to your ultimate investment returns. This is an advantage of making regular investments on a systematic basis.
For these reasons, it makes sense to be persistent with your regular payroll deductions that are directed into your retirement savings, and let markets recover so your portfolio is in a position to bounce back.
Changes to consider Should you be content to stand pat with your portfolio regardless of the market’s performance? In many cases, yes. However, there are several potential actions to consider in light of recent market performance:
1. If you’re closing in on retirement (within five years or less), it may make sense to scale back the level of risk in your portfolio mix. That could mean shifting some assets into fixed-income investments and taking some money out of your equity investments.
2. If you feel any of your investments have been less productive than they should be for an extended period, you may want to consider repositioning some assets.
3. It may be an opportune time to boost the amount of money you set aside for retirement. If you haven’t regularly raised your contribution level, consider doing so now. For those age 50 and older, you can take advantage of catch-up contributions of up to $6,500 to your workplace retirement account.
Talk to your advisor It’s important that the investment strategy you pursue in your work-
place plan be consistent with your overall financial goals. Now is a good time to sit down with your advisor to determine if you’re saving enough for retirement and if the investments in your retirement account are working most effectively for you.
Duane J Lusson, CFP, ChFC, CLU, MSFS, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Ottumwa, Iowa.
He specializes in fee-based financial planning and asset management strategies and has been in practice for 30 years. To contact him, call 641-684-4200 or stop by his office at 527 W. Second in Ottumwa, Iowa.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.
Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
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