Is It a Good Time To Invest? | Summit Wealth Partners

Brad Towle is a Senior Wealth Advisor and Senior Executive of the Private Client Group at Summit Wealth Partners

Should I Get Back Into the Stock Market Now?

» by Brad Towle, Senior Executive

The emergence of the COVID-19 pandemic scared investors and caused a significant sell-off of assets. A study by Fidelity found that 18% of inventors sold their full equity holdings between February and May of 2020. But since hitting their lows on March 20, 2020, both the Dow Jones and S&P 500 have seen more than 70% increases in market value. If you were one of the investors who exited the market, you might be wondering if it’s a good time to invest again. Here are some tips to consider to determine if it’s the best time to start investing back in the market.

When To Get Back in the Market

Understand What Caused You to Sell

Selling stocks is usually triggered by emotion rather than facts and data, but sometimes real-life events, like losing your job, motivate selling. Assessing the factors that caused you to sell and analyzing your current situation plays into your decision to reinvest. If you believe it’s not time to put money back in the market, then you need to understand the potential long-term consequences, which include:

Limited purchasing power
Accepting permanent losses in your portfolio
Having less to spend in retirement
Delaying retirement

Remember, timing the market is less important than time spent in the market.

Evaluate Emergency Funds

It’s important to assess how much you have saved before determining if it’s time to get back in the market. The amount of money in your emergency fund depends on your job status. If you’re working, make sure you have at least three months of living expenses saved in the bank. This provides financial security in case of job loss and allows you to reinvest the rest of your savings into your portfolio. The recommended savings increases for retirees; make sure you have one to three years of living expenses saved. Having a significant financial cushion helps limit portfolio withdrawals and gives your investments time to recover if the market is down.

Determine Your Preferred Mix of Bonds and Stocks

If the unpredictable market swings of 2020 made you reconsider your investment strategy, then consider a new mix of stocks, bonds, and other investments. For younger investors with time to build wealth before withdrawing from their portfolios, it’s recommended the majority of their assets be in stocks. If you’re nearing retirement, then adding up to 20% in bonds provides security, and if you’re already retired, consider investing up to 50% in bonds depending on cash-flow needs.

Finalize An Approach

If you’ve decided it’s a good time to invest, your homework isn’t done; now you have to determine your approach. Investors have two approaches for reentering the market; they can either invest a lump-sum immediately or adopt a dollar-cost averaging strategy that slowly reinvests their money back into the stock market. While a dollar-cost average approach reduces risk, the lump-sum method generates a higher long-term return. Consulting with an investment advisor helps you pick the right asset allocation approach.

Focus on Fundamentals

Focusing on fundamentals helps you survive economic downturns by providing reminders about long-term goals and approaches. Fundamental analysis means reviewing your cash flow, asset returns, and future growth potential to assess your financial health. Reviewing your long-term plan allows you to see the gains you’ve seen and provides confidence that the good times will return soon.

Let Summit Wealth Partners Help You Get Back in the Market

Deciding whether it’s a good time to invest in the market is difficult, but working with an experienced financial advisor allows you to make an educated choice. The advising team at Summit develops a custom financial plan to bring focus and clarity to your financial future. Our financial planning process is designed to enhance our clients’ experience and includes these steps:

Organization

Unpredictable markets and changing laws make financial planning important for long-term security. Our advisors help you achieve your goals by providing the highest standard of planning services and making adjustments when necessary. We offer our clients the chance The organization step involves a complimentary one-hour consultation where we gather documents and account data to assess your financial status and determine if we’re a good fit. We’ll ask you questions about your goals, risks, and preferred investment strategies to see if our team can bring value to your financial future.

Formalization

Having a trusted Summit advisor on your side helps you survive in recession times by bringing clarity to your finances and helping you Once we decide to work together, we start having more personalized conversations. Your Summit advisor uses the information gathered during the consultation sessions to build a custom financial strategy. We’ll address your concerns while detailing each step to develop clear action items that align with your goals.

Implementation

Once we have all the pieces, we start putting your goals into action. Our implementation process includes investment monitoring, cash-flow analysis, and liability management to maximize your returns.

Maintenance

Our advisors provide complete transparency with regular check-ins to update you on your portfolio’s performance. Market fluctuations are difficult to predict, but our team stays up to date on the latest trends and offers alternate strategies when necessary.

Summit Wealth Partners has helped individuals and their families with wealth management solutions for nearly 40 years. We know how important peace of mind is to your finances and our team works hard to mitigate unnecessary financial risks. Contact us today for a free consultation and see the difference we can make.