April 2020
Each month, Wellspring's wealth strategist and advisors will share news and articles to shed light on the current economy, financial markets, and common tasks for maintaining a well-rounded and resilient personal financial plan.

Click on the links below to learn more.
A lot of unprecedented numbers made headlines as a consequence of the COVID-19 pandemic in the past weeks. Financial markets around the world fell significantly and subsequently entered bear territory, and both monetary and fiscal policy responded in succession. A global recession seems inevitable. Our investment team at Wellspring is working diligently to recognize and respond to the current world economy and financial market environment that is in a state of flux.
Here are some takeaways we want to share:
  • Besides amassing monetary gains, the investment portfolio is driven by financial goals and objectives. Explicit goals and objectives can be organized in a personal financial plan, then, assessed to review progress of achieving desired outcomes overtime (e.g. education savings, adequate retirement income, wealth preservation, generational asset transfer). Having a plan serves as a set of guiding principles to making strategic investment decisions especially during this period when emotions can be tested. Adding, having a plan on how to navigate withdrawal and distributions following a significant financial market downturn is vital for retirees. A personal financial plan will help you look ahead and avoid short-term, hasty decisions without due consideration.

  • You may have the urge to reduce risk. If you looked at your investment portfolio recently however, financial market dynamics may have altered your asset allocation already. Consider a 60% stocks / 40% bonds portfolio, emphasis on the higher percentage of exposure to risky assets (i.e. stocks). That same portfolio today is now 50% stocks / 50% bonds.

  • Interest rates declined and therefore increased the importance of finding sources of income elsewhere, including dividend paying stocks and alternative investments like real estate. Long-term, income-oriented investment vehicles such as annuities may also be another source of current or future income stream.

  • One approach to investing is the purchase of index funds or ETFs. Passive investment has garnered much attention especially during the bull market of the last decade. However, current financial market circumstances provides opportunities for active managers.

  • We expect continued disruption of economic activity this year. However, we think these effects are temporary. We believe a path to recovery still exists. If 2020 sees prolonged isolation of the public, then, a recovery is less likely by year end. We will look to 2021 as a possible turnaround point. 

  • The US financial market is moved by fundamental valuation, which depends on corporate forward looking earnings rather than months. This means that despite the financial squeeze in the short term many corporations are experiencing now, it is temporary. Instead, it is important to consider the business model and financial soundness of corporations in the decade ahead in light of current disruptions.

  • Both emerging and international developed financial markets appear to have a valuation advantage over their US counterpart. The strong US dollar further amplifies this advantage and making a case for favor of non-US asset classes. Geographical diversification in other words is important when considering investment selection in a globally-connected world.

As many businesses shifted activities to remote work and the absence of in-person meetings currently, clients can still stay engaged by accessing resources made available online by their financial advisor. At Wellspring we have been sharing the personal financial planning resource, eMoney, our client portal. Clients can securely view investment accounts, input personal updates, add account connections, as well as utilize the vault to share financial documents with our team. Through this one platform we can then view your financial picture and elicit guidance to keep you on track. Now may also be a time to review action items that may have been put off; we continue to respond timely to email if you would like to revisit and schedule a call to discuss with your financial advisor. If you call our office and leave a detailed voicemail, a member from our team will also reach out.
There will be no shared news articles this month as we are sure everyone has been attentively monitoring developments and announcements circulating the public sphere. The speed and abundance of information today can also be overwhelming. Therefore, stay informed but also do not allow yourself to be captured by sensationalism. Spend your time continuing on personal growth and finding new meaningful ways of spending time with family. Connect with friends remotely through video calls or simply dial to stay in touch. More so, consider safe and prudent ways to supporting your local community and businesses.
We can all find a silver lining during this time and come out together stronger. Remember to practice social distancing, take accountability, stay calm and patient, remain vigilant, and stay resilient. As one saying goes, "health is wealth".
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Nothing contained herein should be considered as investment advice or a recommendation or solicitation for the purchase or sale of any security or other investment. Opinions contained herein should not be interpreted as a forecast of future events or a guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client's portfolio. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there are no assurances that it will match or outperform any particular benchmark.