The Capitalist Investor - Episode 195 The Capitalist InvestorHello, and welcome to this week’s episode of The Capitalist Investor. This week, we want to take a step back and focus on planning in times of economic uncertainty. We found a great article from CNBC titled “The Three Money Moves Wealthy Americans are Most Likely to Make in Times of Economic Uncertainty.” Let’s dive into the key points and expand on what successful people are doing during uncertain times.Breaking Down What Wealthy Americans Are Doing in Uncertain TimesThis week, we want to take a step back and focus on planning in times of economic uncertainty. We found a great article from CNBC titled “The Three Money Moves Wealthy Americans are Most Likely to Make in Times of Economic Uncertainty.” Let’s dive into the key points and expand on what successful people are doing during uncertain times.According to Northwest Mutual, 84% of the wealthiest Americans have a long-term financial plan that accounts for economic ups and downs, compared to only 52% of the general population. This statistic surprises us because it’s rare for someone to walk in with a legitimate financial plan. Planning for the unknown is crucial to alleviate anxiety and ensure a smooth transition into retirement. When it comes to retirement, people often wonder how they will pay their bills and maintain their lifestyle. Financial planning helps remove this anxiety by providing a roadmap for the future. The more prepared you are, the more confident you’ll be in your ability to navigate different scenarios. It’s essential to test how the future could play out and understand how you will respond in various situations. A financial plan is not just about investments; it’s about setting goals, developing strategies, and using the right tools. Many people focus solely on their investments without considering the bigger picture. It’s crucial to understand why you’re saving and what your retirement goals are. Picking the right retirement date and ensuring you have enough savings are essential factors to consider. Asset allocation is another critical aspect of planning for ups and downs. The stock market doesn’t go straight up; there are ups and downs along the way. Taking a long-term perspective and having a diversified portfolio can help weather market volatility. It’s important to remember that investing is a marathon, not a sprint. Seven out of ten wealthy Americans are working with an advisor. While not all advisors are created equal, one of the most significant benefits of working with an advisor is avoiding behavioral finance errors. Emotional investing can lead to poor decision-making, especially during market turbulence. An advisor provides a detached perspective and helps clients make rational choices based on logic and historical data. An advisor is like a retirement CFO, helping clients make informed financial decisions. They can assist with retirement timing, spending strategies, and even major financial decisions like home renovations. By having a coordinated plan that takes into account investments, taxes, and estate planning, clients can make better financial choices and optimize their long-term outcomes. It’s not enough to have a plan; you must also follow through and execute it. The best time to go through the planning process is when the waters are calm. Crisis planning is not ideal, as it can lead to rushed decisions and poor outcomes. By having a well-mapped-out plan in advance, you can have confidence in its success. Financial plans should be regularly reviewed and updated to reflect changing circumstances. Factors like inflation, taxes, and health can impact your financial situation. By refreshing your plan annually, you can ensure that it remains aligned with your goals and adjust as needed. Building conservatism into the plan, using future projected rates of return, and considering tax efficiency are all crucial elements of staying committed to the plan. Remember, financial planning is not a one-time event; it’s an ongoing process. Regularly reviewing and updating your plan ensures that it remains aligned with your goals and helps you make informed decisions. By following these money moves, you can position yourself for financial security and peace of mind in times of economic uncertainty.A day in the life of a Financial Advisor: Connect with Derek GabrielsenTwitter: @DerekGabrielsenFollow Derek on LinkedInSend Derek a message hereCheck out Derek’s YouTube channel!Connect With Luke LloydTwitter: @LloydBoyLukeFollow Luke on LinkedInSend Luke a message hereThe SWP Connect YouTube ChannelConnect with Tony ZabiegalaTwitter: @TonyZabiegalaFollow Tony on LinkedInSend Tony a message hereThe SWP Connect YouTube channel!Send your questions and comments to us at info@SWPConnect.com
