You might be wondering when will it end. You aren’t alone. The markets are experiencing some of the worst daily drops in decades. The fears sparked by the spread of the virus along with the price war that Russia and Saudi Arabia are engaged in over oil were not the cause, but the final couple of straws. The fuse was ready, the proverbial bomb was already built. We had near record high stock valuations, historically low interest rates, running in the longest bull market in history. It’s no wonder the fuse lit so easily.
There are a lot of people who have been affected by this market decline. These are sad and frustrating times. The only thing to do at this point, is decide what to do going forward. That is why we follow the principles of retirement planning. Our founder Brian James Decker has built our firm around these principles. And when followed correctly, you are given a high probability of success in retirement planning.
The principles are:
- Only draw income from principal guaranteed sources
- Diversify by purpose, using the investment triangle
- Use a distribution plan, not the pie chart
The first principle is so that your income is protected against market drops. So, when the market drops, your income doesn’t have to take the same drop. The second principle uses the investment triangle (liquidity, principal guarantee, growth) so you can know what purpose your investments have. Do you have funds that give you all three aspects of the triangle? The third principle is there so you know how much money you can draw from your plan and helps you know where your income is coming from without guessing.
For our clients, we set their plans up following these principles. If you have questions about your plan or how this market drop is impacting your accounts, please give us a call. We are set up to provide virtual visits. We don’t want to let this market drop stop you from planning out your retirement.