As I write this, the markets are tumbling as the globe tries to figure out how to prevent COVID-19's spread and the severe effects on business and everyday life. It's good to be in my mid-forties and have had enough life experiences to know that this isn't the first time I've experienced a financial slump as an adult. At our firm, we've had multiple conversations with young adult coworkers about their first experiences with economic crises. When we have those conversations, I see myself as the retiree on the front porch, sitting in his rocking chair and saying, "Back in my day..." However, wisdom comes from experience, and wisdom develops to confidence, which leads to calm.
We've all heard that the best time to prepare for a crisis is before one occurs. But who among us hasn't put off doing something that would have saved us time and effort if we had just set aside some time to get things in order? At Smith and Howard Wealth Management, we provide comprehensive financial planning along with investment management to all of our customers so that we can advise them on the big picture.
When we talk about comprehensive financial planning, we're talking about a lot more than just investment planning and forecasting. The success of an investment is only a minor part of a household's total financial picture. And, while it's probably at the top of your thoughts and at the forefront of your talks with family and friends right now, your financial plan has a big impact on how your returns affect your long-term goals.
Income, spending, liquidity, insurance, estate planning, and investments are all part of comprehensive financial planning. A linear study of what a straight-line average investment return delivers isn't enough for your entire plan. To stress-test your financial strategy, we employ a Monte Carlo analysis for investment returns. This means we perform simulations based on historical volatility that encompasses both good and poor years in the markets. Our customers who have gone through the planning process with us have trust that we have considered what would happen if there is an "event" in the financial markets, such as the one we are experiencing right now, as well as those that have occurred many times before.
It might not be the greatest moment to revise your strategy based on recently deflated values without taking into account potential market recoveries. Recent market movements, on the other hand, need evaluating your previous financial strategy with your financial adviser. Your financial planner may look through your spending, income, and retirement assumptions with you and see what changes you can make to keep your plan on track. If you haven't begun a plan with us yet, we can assist you with assessing your circumstances. Although current investment prices may make your results appear bleak, we can assist you in analyzing your possibilities.
