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3rd Quarter Market Commentary

Retirement Rescue

COVID-19 and Volatility

The current pandemic has had devastating affects on the economy and likely on your retirement savings. But now is not the time to panic in the pandemic!

If you are concerned about loses in your retirement accounts, here are three actions you can take to save your retirement. Our clients know these actions work. You can ask them.

1. Turn off the autopilot: If you have a 401k or an IRA that you manage yourself, you are on autopilot. The standard strategy for you suggests you pick a life-style fund or a diversified allocation to weather the storms of volatility and arrive at your retirement somewhat ahead with your investments. 

This strategy does lower your risk, but it also lowers your potential returns. When markets tank your investments will lose money. Maybe not a large percentage, but it’s a loss. Then, when markets surge you basically capture only a small portion of the increases. The net result is a smoother ride, yes, but generally meager returns.

While it may be less frightening, using an autopilot strategy for your retirement accounts can be devastating. Without protective action, your account balance still goes down when markets experience a correction or when values slide lower. You need a better strategy. 

2. Be aggressive about your savings rate: Accumulation is the object. Your rate of return is not the major factor in building retirement capital. Believe it or not, savings usually make up the bulk of your assets. So, even if you failed to save in your younger years, adding dollars now can make a huge difference down the road. 

Of course, there are always reasons why it’s difficult to save at the moment. Don’t be fooled, procrastination is the enemy here. I always tell my clients, “The hardest day to save is today!” Therefore, take action and start saving or increase your saving rate today!

3. Hire a tactical advisor:  If you don’t have an advisor, the thought of paying for advice may seem like a waste of money. However, paying an advisor will likely save you from costly mistakes and help you earn substantially greater returns. Your investment gains after paying the fees may be many times higher than you would experience on autopilot when doing it yourself.

In addition, not all advisors are equal. It seems illogical to pay an advisor an annual fee when they take a passive approach. I would not pay someone to “set it and forget it,” rebalancing by the calendar once or twice a year! At H&A we believe you are better off, when you hire a tactical advisor who is motivated to grow your money. 

If your advisor charges a fixed annual rate monthly based on your balance each month, as we do at H&A, you and the advisor have a vested interest in success. If your balance drops, the advisor gets a pay cut. If your advisor protects your gains in a down-turn, you and the advisor benefit. 

When the markets are increasing in value, a tactical advisor will take advantage of opportunities for you. You capture more investment gains, while the advisor gets a small pay raise. At H&A, your advisor’s interest and your interest are aligned. We want to help you succeed because we succeed with you. 

So, hire an advisor who will help you manage your assets, not just charge a fee. You will likely make more with your investments and avoid mistakes that plague autopilot advisors and do-it-yourself strategies. Hire a fiduciary tactical advisor and rescue your retirement.

If you would like to know more, please contact us. We will be happy to discuss your goals and concerns. If you would like a confidential review of your portfolio, call (310) 318-3700 for a phone or virtual meeting, or book your meeting online. An initial consultation is always free and without obligation.

Sincerely,

 

 

David L. Harris, PhD, ChFC, CFP®
Wealth Advisor 
HARRIS & ASSOCIATES

A Registered Investment Adivsor

(310) 318-3700
www.harrisadvisory.com

Harris & Associates is a Registered Investment Adviser. This commentary is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Harris & Associates and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Harris & Associates unless a client service agreement is in place.

[If you would like a confidential review of your portfolio, call for an appointment, or book your meeting on-line at www.harrisadvisory.com. It is always free and without obligation.]