One of the silver linings of the global pandemic is that people learned to be flexible, at least from a financial perspective. 2020 was full of unpredictability, and those with money in the markets quickly realized the only way to cope was to get prepared by having a solid financial plan, learn from past mistakes, and stay the course.
There were, of course, a few other lessons remembered which stand the test of time. Here are a few suggestions on how to protect yourself and your financial future from unforeseen circumstances:
Spend less, save more.
This bit of advice seems too obvious, right? Yet, NerdWallet conducted a survey and found that among those who said they picked up new financial habits during the pandemic plan to carry them into 2021, 58% said they were cutting back spending on wants, and 36% said they were cutting back spending on needs .
Focus on the long-term but remain flexible.
One bad quarter should not break your financial plan. If you have worked with your financial advisor to outline various scenarios, you can avoid significant losses and adjust your investment portfolio accordingly. Also, meeting with your financial professional at least twice a year makes a lot of sense to ensure you keep a pulse on your long-term objectives.
Diversification is key.
Diversifying can help reduce volatility. With so many different options available, sometimes it can be challenging to determine which financial vehicle makes the most sense. Working with your financial advisor to determine your mix of stocks or fixed income solutions such as annuities or CDs is always a good idea. Most people do not realize the option to leverage other assets such as life insurance that may not be as volatile as the stock market.
Our team believes in the power of planning, which can directly impact your financial success, even during unpredictable times. Contact us today for a free consultation.