3 Things You Can Do In Today’s Market

Aug 13 2009
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Richard T. Feight, CFP®

Among independent financial advisors, Mr. Feight is one of the most well known and highly respected “Fee-Only” financial planners. Since 1997, Rich has dedicated his career to offering low cost “Fee-Only” comprehensive financial planning and investment advice. Rich assists his clients in organizing their finances so that they can retire on time.Rich is a graduate of Michigan State University where he received his degree in Finance. Rich has earned the Certificate of Financial Planning from The College for Financial Planning in Denver , Colorado that was comprised of intense graduate level classes grounding him in the various foundations of financial planning. He is a CFP® (Certified Financial Planner®) since 2001, meeting the experience, education requirements and passing the two-day, 10 hour exam, making him one of the few in the country who hold the designation. Since 2003, Rich has subscribed to the stringent and mandatory annual educational hours, experience, and code of ethics to meet the requirements to be a NAPFA Registered Financial Advisor. Out of the 800,000 individuals in the country who claim they are financial advisors/planners, fewer than 1,300 in the country qualify for the membership; Rich is one of them.

Rich is the President of the Financial Planning Association (FPA) of Michigan . The FPA of Michigan is one of largest and influential chapter in the country. Rich was recently named President for Transportation Toastmasters Club 4776 downtown Lansing . He has been quoted in both local and national media from Noise Magazine to CNBC, and Bloomberg, and industry news publications such as Investment News and Financial Advisor Magazine. Rich enjoys public speaking and has spoke at industry educational meeting, high schools, and executive investment clubs, AARP conferences, and business educational seminars for companies looking to educate their employees. Rich views his role as a Fiduciary for his clients as the single biggest key to any planning relationship and strives to provide the most competent, unbiased and objective advice in the financial planning profession today.

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1. PlanLet’s face it, most of these recessions are short relative to a long term time horizon. In fact, some economist are starting to call this recession over. (See http://bit.ly/jZQ9u).  By long term I mean, most people will be retired for 30 or more years. According to Jacqueline Doherty, in her Barron’s article Closer to the Bottom, she says that “the average U.S. recession lasts 10 months, and stocks hit their low about 3 months before the recession ends.” Even though this recession has lasted longer, with proper planning you will have enough money set aside for income, or short term needs. A few important planning tips are:

  • Have income for about 5 years available in short term bonds and money market positions.
  • An emergency fund of 3 to 6 months worth of income or expenses in cash does wonders for the psyche in a market like this.
  • Do not stretch your expenses by using credit to make extra purchases such as cars, vacations, etc.

2. Don’t Time

If your short term planning needs are taken care of, it shouldn’t be difficult to adhere to the buy and hold philosophy. Even if you see your values drop, if you have 5 years worth of income, it would be hard to believe that in 2013 the market wouldn’t be back. Of course there are no guarantees, but we are far from a depression, and further from a “Great” depression. By definition, a depression is a economic activity shrinking by 10%. During the “Great” depression, the economy shrunk by 30%.

3. Don’t Be Greedy or Fearful, Just Be

It may sound a little zen-like, but let’s face it, most of us can’t time the market like Buffet. The best way for us to participate in the stock market is by keeping our ego checked at the door and attempting to just get in the market, and be happy with the returns it has to offer. Let good financial habits dictate your money success. Most people get into funds they expect to beat the market, and during times like these, get killed. Then they go conservative and never recover. By just buying index funds, you don’t have to worry about beating the market all the time. And if John Bogle’s success with the Vanguard 500 Index fund is any measure of success, we’ll be in the upper percentile of return because of low costs and broad diversification. Not to mention, you don’t have to watch, or worry about it. You can, well… just be. Of course, past performance is not indicative of future performance. There are no guarantees when investing in the stock market.
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Rich Feight is a Fee-Only Certified Financial Planner and founder of IAM FInancial, LLC in Michigan. He is also the author of Thinking Beyond Numbers, the financial planning and investment blog that brings awareness to your financial habits so that you can make good decisions. You can learn more about Rich at IAM FInancial, LLC.

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Avatar
Richard T. Feight, CFP®

Among independent financial advisors, Mr. Feight is one of the most well known and highly respected “Fee-Only” financial planners. Since 1997, Rich has dedicated his career to offering low cost “Fee-Only” comprehensive financial planning and investment advice. Rich assists his clients in organizing their finances so that they can retire on time.Rich is a graduate of Michigan State University where he received his degree in Finance. Rich has earned the Certificate of Financial Planning from The College for Financial Planning in Denver , Colorado that was comprised of intense graduate level classes grounding him in the various foundations of financial planning. He is a CFP® (Certified Financial Planner®) since 2001, meeting the experience, education requirements and passing the two-day, 10 hour exam, making him one of the few in the country who hold the designation. Since 2003, Rich has subscribed to the stringent and mandatory annual educational hours, experience, and code of ethics to meet the requirements to be a NAPFA Registered Financial Advisor. Out of the 800,000 individuals in the country who claim they are financial advisors/planners, fewer than 1,300 in the country qualify for the membership; Rich is one of them.

Rich is the President of the Financial Planning Association (FPA) of Michigan . The FPA of Michigan is one of largest and influential chapter in the country. Rich was recently named President for Transportation Toastmasters Club 4776 downtown Lansing . He has been quoted in both local and national media from Noise Magazine to CNBC, and Bloomberg, and industry news publications such as Investment News and Financial Advisor Magazine. Rich enjoys public speaking and has spoke at industry educational meeting, high schools, and executive investment clubs, AARP conferences, and business educational seminars for companies looking to educate their employees. Rich views his role as a Fiduciary for his clients as the single biggest key to any planning relationship and strives to provide the most competent, unbiased and objective advice in the financial planning profession today.

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