Hello,

Amelia and I had a father-daughter outing at the Wofford basketball game on Saturday. If you recall from past newsletters, Amelia is afraid of mascots. Somehow I was able to convince her to get a picture with the terrier though. The compromise was I had to stand in between her and the mascot.
David with Amelia and the Mascot
When I asked her if she wanted to go the game, she said she did but with one caveat. She had to have popcorn! When we ordered popcorn, she decided she needed a hotdog too. Midway through the second half, after eating the popcorn and hotdog, she told me she was ready for BBQ. I’m not sure how a five-year-old can eat that much…

It was a nail-biter of a game. It was neck-and-neck most of the game. Wofford pulled away a little with a couple of minutes to go, but High Point came back. Wofford was down by two with two seconds on the clock when Corey Tripp was fouled. Talk about pressure! Tripp sunk both of them. If you’re local and you’ve never been to a game it’s worth checking out. They are fun and the tickets are cheap.
Amelia cheering at the basketball game.
So, when is it time to overcome your fears like Amelia did with the mascot and do something different with your 401(k)?

It really depends. Everyone is unique and has nuance to their circumstances. If you have more than ten years to go before retirement the reality is “slow and steady” tends to win the race. Maintaining your holdings may be the best option. From the Wall Street Journal, “Studies have found that investors who trade frequently are more likely to buy after rallies push prices up and sell when markets are depressed and their holdings are beaten down.”
 
What often happens is we see our accounts going down, down, and we finally sell toward the bottom of the decline. Then we are too nervous to get back in so, we wait until the market substantially improves. We may miss the upward velocity that tends to help us make up our losses. Then we may never recover from the downturn.

Ansley loves going outside to play in her playhouse. Clearly, she's going to enjoy talking on the phone...
Ansley in the playhouse
The other thing we should ask ourself about our investing progress is how long will I be invested for? And how long of a timeframe am I considering?
 
If we are focused on a small part of our overall picture, we may lose perspective and become distressed. In my experience we should focus on financial planning more than our year-to-year returns.
 
Our outlook should shift when we are within five years of retiring or we are in retirement. It makes sense to develop a comprehensive strategy that looks at our whole life and plans for investing, insurance, taxes, healthcare, Social Security, long-term care, and estate planning. Once we have a grasp on where those things are and we’ve figured out what needs our attention, we can determine how to most substantially generate retirement income.
Ansley in the playhouse
The rub over the last two years has been declining bond values as interest rates have risen. Traditional advisors often lean heavily into bonds for retirement planning when they can’t or don’t use all the tools for financial planning. Other financial vehicles may lessen the risk we have in retirement. A good test question when interviewing an advisor is to ask what products he or she does not ever use.
 
According to JP Morgan a person allocated to 60% equities and 40% bonds last year lost 16%. If you lost 16% then you need to make over 19% to break even. That can be a hurdle. There are steps you can take to prevent losses like this and put guard rails on your equity positions. Our clients did not experience double digit losses last year like the average investor. That’s a win in retirement.

Until next week,

David C. Treece,
Financial Planner
864.641.7955
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Clients Excel, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through Creative One Wealth. Creative One Wealth and Clients Excel, LLC are not affiliated companies. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified tax professional for guidance before making any purchasing decisions. Clients Excel, LLC is not affiliated with or endorsed by the U.S. Government or any governmental agency. Clients Excel, LLC has a strategic partnership with tax professionals and attorneys who can provide tax and/or legal advice. 11/15/2023