Driving to Milwaukee last week on our way to see the Cubs play the Brewers at Miller Park (one of my favorite sports venues), we drove past the Six Flags amusement park. From the Interstate, we could see many of the rides, including several of the roller coasters.
Investors might think they are on a bit of a roller coaster ride themselves. In 2011 the market peaked in April, only to see a pronounced downward trend through the third quarter of the year. The fourth quarter witnessed a nice bounce, which carried through and into the first quarter of this year. Once again, however, we’ve seen a bit of drop since the end of March. Certainly the issues in Europe and the failed Facebook IPO haven’t helped matters.
Should investors get off of the roller coaster? I would generally say no. Market ups and downs are part of the process, especially over the past 12 years. As painful as the 2008-09 market drop was, my clients are better off having stuck to their investing plan versus those folks who sold out near the bottom, booked their losses, and sat on the sidelines as the market staged a tremendous rally over the three years ended March 31 of this year. I firmly believe most of us are wise to stick with our long-term investment allocations. This doesn’t mean set it and forget it, however.
Some financial moves to consider this summer:
- Review the disclosure statements that you either have received or will be receiving from your 401(k) provider disclosing the investment costs and other fees that you incur as an investor in the plan.
- Rebalance your portfolio as needed. This is always good advice, especially given all of the market volatility we’ve seen over the past year. Make sure you review your portfolio at regular intervals for rebalancing, though I wouldn’t do this any more frequently than quarterly.
- Find a financial planner (fee-only) and get a financial plan in place. If it’s been a while, this is a good time to update. If you’ve been procrastinating, there’s no time like the present. Retirement isn’t getting any further away.
Get these items taken care of so you can go out and do some of the fun things we associate with summer:
- Go ride a real roller coaster at your favorite amusement park.
- Check out a local street festival. Here in Chicago, we attended the Old Town Art Festival this past weekend, a great event in a great neighborhood of the city.
- Take in a baseball game. Hopefully your team is better than our Cubs.
- Go for a walk or bicycle ride and enjoy the nice weather.
Here’s wishing all of you a great summer.
Roger Wohlner, CFP®, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill., where he provides advice to individual clients, retirement plan sponsors, foundations, and endowments. Read more about Roger here.