The future is full of unknowns. It’s important to remember that receiving full service financial services doesn’t mean your advisor has a crystal ball. (Even the most expensive, top-rated financial advisor can’t predict the future.) That’s why it’s important to focus on factors you can control, instead of worrying about the unknown.
Below, we’ll look at 5 common things that clients – us too – wish they could know ahead of time, but can’t, as well as concrete steps you can take to prepare for these events now.
1. The Stock Market
Despite what you read in the headlines, timing the market is impossible. There are several studies proving that even the most genius of stock market traders can’t do it. From 2002 to 2017, only one in 13 large-cap managers, one in 19 mid-cap managers, and one in 23 small-cap managers were able to beat the market. The statistics are even bleaker for individual investors.
What To Do About It
Remember, time in the market is better than timing the market. Instead of spending your energy trying to guess market moves, focus on factors you can control.
- Save and invest according to plan
- Diversify your portfolio
- Make sure you have an appropriate asset allocation
- Rebalance as needed
- Manage expenses, turnover and taxes
You’ll be in a better position to grow your wealth if you focus on these factors instead of focusing on things you can’t control.
If stock market volatility is causing you to lose sleep at night (especially amid the recent Coronavirus news), consider meeting with a financial advisor who can help calm your fears and create a game plan for moving forward.
2. Unexpected Changes in the Family
As much as we don’t want to admit it, change is the only constant in life. Whether your adult kid decides to move back home, you’re suddenly responsible for aging parents (or both) or you experience an unexpected divorce, these changes can be life-altering. And they don’t usually come planned.
What To Do About It
Create a plan that outlines what you would do in any of these what-if scenarios:
- You had a baby
- You were suddenly responsible for aging parents
- Your adult child wanted to move back home
- You had a divorce
If you’re married, have a discussion with your spouse where you both consider what course of action you would take if any of these scenarios were to happen.
Would you get professional help if you had to care for aging parents? Would you put restrictions on how long your adult children could stay with you while they got back on their feet? Talking through these situations can help you create a game plan for moving forward.
While you’re at it, make sure you regularly update your beneficiaries and insurance policies. If you have a new baby, you may want to increase your life insurance policy to account for your new bundle of joy. But if you go through a divorce, you’ll likely want to remove your ex as the beneficiary from your accounts.
3. Natural Disaster
Earthquakes, hurricanes, floods, wildfires – we can’t predict any of these unfortunate events. But there are ways you can prepare for a catastrophe before it even happens.
What To Do About It
Follow these steps to keep you and your loved ones safe during a natural disaster:
- Create an emergency preparedness kit. It’s typically recommended to keep at least three days of food, water, clothing and medication in a waterproof container, so you can grab it quickly if needed.
- Create a disaster evacuation plan. Clearly outline a plan with your family members and discuss what would happen if a natural disaster came to your area. Talk through where you’d find shelter, the route you’d take to get there and how you’d communicate with your family.
- Sign up for alerts. Most local and national organizations have an alert system in place. Make sure you and your family stay in-the-know about any upcoming natural disasters.
- Make sure you have adequate insurance coverage. Make sure your home insurance covers the most common natural disasters in your area. If your home has increased in value since you purchased it, review your coverage to see if you need to adjust your policy.
4. Identity Theft
Did you know that there’s about a 1 in 15 chance you’ll become a victim of identity fraud? It’s true. And in today’s digital society, there’s no shortage of data breaches happening around the U.S. It seems like every few months, we hear a story about a company that’s inadvertently leaked the personal information of thousands of customers as a result of a data breach.
What To Do About It
Here are five steps to take to protect yourself from identity theft:
- Enact a credit freeze at all three credit bureaus. With a credit freeze in place, the only way to open a new financial account is to call the credit bureau, give them your unique PIN and have the freeze temporarily lifted.
- Minimize your number of credit card accounts. The more accounts you have, the harder it is to stay on top of them all. Only open essential financial accounts and be sure to check each of them once a week for fraudulent charges.
- Create strong, unique passwords for all your financial accounts. Keep these passwords in a secure vault where only you have the master password.
- Enable two-factor authentication. If any of your financial institutions offer two-factor authentication, enable this extra security feature. Instead of simply entering in a password, two-factor authentication requires you to confirm your identity using your phone or email address each time you log on.
- Set-up account alerts. In addition to checking your accounts for fraudulent charges weekly, set up account alerts so that you’re notified each time someone logs in from an unknown device or makes an unauthorized transaction.
5. Job Loss
Losing your job is one of the most stressful things that could ever happen to you, especially considering some people can’t even cover an unexpected $400 bill. The best thing you can do to prepare for potential job loss is to make sure you have a contingency plan in place.
What To Do About It
First, make sure you have a fully funded emergency fund. You’ll want to keep three to six months’ worth of expenses in the account at all times. Keep this money in a high-yield savings account where it’s not affected by stock market conditions.
Lastly, make sure your job skills stay sharp. Keep your resume up-to-date. Renew certifications as they expire. Stay on top of the latest industry trends and news. It can take time to find a new job. Staying at the top of your field can help you rebound from an unexpected job loss as quickly as possible.
How We Can Help
Instead of worrying about factors you can’t control, prepare for them now so you know exactly what to do when the time comes. (That’s what full service financial services mean!) A financial advisor can help you prepare for the financial challenges listed above.
Whether you need help adjusting your portfolio, preparing for an unexpected family change or making sure you have adequate insurance coverage, PAX Financial Group is here to help you gain financial confidence.
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.