The Importance of a Well Laid Out Financial Plan

“On a train bound for nowhere . . . or so the song goes. Investing is NOT gambling; done right, it incorporates thoughtful portfolio construction incorporating objectives with capital market assumptions influenced by the current environment and expectations going forward. But sometimes gambling is afoot in the markets.”

Craig Basinger, Chief Market Strategist of Purpose Investments

This quote is from a Purpose Investments’ article that reinforces the importance of a well laid out financial plan. Welch Family Wealth Advisory continues to believe in the notion that financial markets will continue to rise over time. With that in mind, it is important to stay invested. However, it is also important to plan for times like these.

As Craig Basinger, Chief Market Strategist of Purpose mentions, it is almost impossible to tell when we are truly at the bottom of a cycle. A well laid out financial plan will have developed a strategy to ensure your cash flow needs will be met without being forced to sell your investments at the wrong time. That is to say, proper planning will take into consideration the timing of exiting the market to ensure funds are available in advance.

The plan will ensure the majority of your funds are properly invested and the cash flow needs can be met in the desired period. It is risky business jumping in and out of the market in a haphazard way. For instance if you missed the five best days of U.S. market gains since 1988 your annualized returns for these years would be 4%.

However, if you had been in the market on those five days your annualized return, for the same time period, would have been 11%. It is time we all had a well laid out comprehensive financial plan – don’t you think?

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