Never Seems to Stop

Summer Is Flying By

The summer break is winding down. I remember years when school didn't start until after Labor Day, and now Amelia goes back in less than a month while Ansley starts K-4!

I suppose it balances out, though. They enjoy more breaks throughout the school year even with a shorter summer.

When I was a kid, sitting still in a classroom for hours felt like a challenge, so the end of summer often felt more like a punishment than anything else!

Market Headlines Never Seem to Stop

This week, I recorded another podcast episode with Andy, our producer, and we discussed an important question:

At what point should investors become concerned

about market downturns or corrections?

It's a worthwhile question because the headlines never seem to let up.

Recently, The Wall Street Journal published a headline that read, "How to Invest When the Global Crisis Never Stops." That certainly captures how many people feel.

The 2020s have already delivered their share of uncertainty. We experienced the COVID-19 pandemic, the highest inflation in decades, rapidly rising interest rates, and in 2022 the S&P 500 declined 18.11%. Then, over the next two calendar years, the market posted returns exceeding 25% each year.

Talk about whiplash.

Focus on the Plan, Not the Panic

So how should we respond when the economy or markets become unsettled?

While none of us can control the markets, we can control how we prepare.

One of the most important planning exercises is understanding your monthly spending needs. Inflation has increased the cost of living for many families, making it even more important to know what it takes to maintain your lifestyle.

Once we understand your spending needs, we can estimate how much may be covered by Social Security and then evaluate how your investment portfolio might help support the remaining income needed throughout retirement.

Rather than reacting to headlines, a thoughtful financial plan gives us a framework for making decisions regardless of the current news cycle.

Why We Use Different Buckets of Money

For many clients who are within five years of retirement or already retired, we often discuss dividing investments according to their intended purpose.

In our office, we refer to one portion as "Blue Money."

These assets are generally intended to provide stability and serve as a potential source for retirement income distributions during periods of market volatility. Depending on a client's circumstances, we may allocate several years of anticipated retirement spending to this portion of the portfolio.

The remainder, which we call "Red Money," is generally invested with a longer time horizon in mind. Its objective is long-term growth and helping investments keep pace with inflation over time.

Every client's situation is unique, but separating investments based on purpose can help create a clearer framework for making financial decisions.

Begin With the End in Mind

One of my favorite principles comes from Stephen Covey's classic book, The 7 Habits of Highly Effective People: "Begin with the end in mind."

I believe that's a valuable mindset for financial planning as well.

Rather than investing based solely on what appears attractive today, it can be helpful to build a plan around where you want to be five, ten, or even twenty years from now.

We've all known people who live paycheck to paycheck—the money is gone before the month is over, and the cycle repeats itself. Investing is certainly different from paying monthly bills, but approaching your investments without a long-term plan can also lead to reactive decisions.

A clear strategy doesn't eliminate uncertainty, but it can provide perspective when markets become volatile.

If you're looking for help developing a goals-based investment strategy or creating a retirement income plan, I'd be happy to talk with you. 864.641.7955

Until next week,

David C. Treece,

Financial Planner