CFP Board Ambassador offers tips to help maintain a healthy sense of caution
Livonia, Mich., Aug. 26, 2017 – Rising asset values in the stock and housing markets, and low volatility, could be tricking investors into a sense of complacency. To mitigate unanticipated risks, investors will need to revisit their financial strategy, said Metro-Detroit CFP Board Ambassador Robert Schmansky, CFP®.
“Volatility is a double-edged sword,” said Schmansky. “During times of low-volatility investors can both be too comfortable with risk, and, many make the mistake of seeking additional risk. These times are especially important to review your plan and roleplay your reaction when volatility inevitably returns.”
Through the first seven months of the year, none of three major stock market indexes has fallen by more than 5 percent. One gauge of market movement, the CBOE Volatility Index (VIX), which measures investors’ expectation of the ups and downs of the S&P 500 Index over the next month, recently dropped to its lowest level in 24 years.
In the latest contribution to LetsMakeaPlan.org, CFP Board offers four tips to help investors avoid slipping into the mindset that investing is easy or risk-free – or that they no longer need to be diligent savers.
1. Have a financial plan: Control your financial destiny by creating a financial game plan with your CFP® professional, which considers your risk tolerance and puts you on track to save enough money to reach your delineated goals.
2. Beware the savings trap: Rising asset values in the stock and housing markets can lead investors to gloss over the basics. “In 2006, I met with a then-client whose net worth had jumped because of a combination of a booming stock market and skyrocketing real estate prices,” Schlesinger said. “In his mind, he didn’t have to save more money.” You probably can guess what happened in the ensuing years.
3. Rebalance your diversified portfolio: There is no better time to rebalance your portfolio than when stock markets are calm and rising. Additionally, this could be an ideal time to replenish your emergency reserve fund, which is where you set aside enough money to cover six to 12 months of living expenses.
4. Stop trying to beat or time the market: Despite evidence that it’s nearly impossible to beat the market consistently over the long term, many investors still delude themselves into thinking they can do so. The same theory goes for those who may also be sitting atop some cash and waiting for the “right” time to put it to work. Who knows when that will be? Although you may invest at the seemingly “wrong” time, putting your money to work brings you one step closer to reaching your goals.
Americans who need help creating and sticking to investment and financial plans that work in all kinds of markets can turn to CERTIFIED FINANCIAL PLANNER™ professionals, who are trained to provide a comprehensive evaluation of their clients’ financial needs and recommend the most appropriate plan to address those needs. CFP® professionals are also required to put their clients’ interests ahead of their own and adhere to a fiduciary duty when providing financial planning services. ABOUT CFP BOARD The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFP Board currently authorizes more than 77,000 individuals to use these marks in the U.S.
CONTACT: Jessica Lewis, Communications Specialist P: 202-379-2256 E:jlewis@cfpboard.org Twitter: @cfpboardmedia
ABOUT ROBERT SCHMANSKY, CFP®
Robert Schmansky is the founder of Clear Financial Advisors of Metro-Detroit. Rob has over a decade of experience helping individuals and families meet their financial goals and overcome money concerns. He is frequently quoted in the media on issues regarding personal financial planning, and has been a contributing writer for U.S. News & World Report, Forbes, Investopedia, and Yahoo!Finance, and an investment expert for FiLife, a former Dow Jones/IAC joint Internet venture. He has been an adjunct instructor of economics and the required courses for candidates to sit for the CFP® exam. Rob was named a Top 100 Most Influential Advisor by Investopedia, 40 Under 40 financial planning professional by InvestmentNews, and he is the 2013 PlanPlus Global Financial Planning Awards North American finalist.
CONTACT: Robert Schmansky, CFP® P: 248-677-1762 E: rob@clearfinancial.net W: www.clear.financial Twitter: @moneyclarity
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