Why now is the time to take your financial temperature

Photo by Dan LeFebvre on Unsplash

On a scale of not being worried at all to being very concerned, how do you feel about your financial situation right now?

If you find yourself doom scrolling Twitter or Facebook or consuming cable news with any regularity, I’d be willing to guess that your level of financial concern is elevated right now. On the other hand, if your reaction to reading the title of this post was, “I wonder why Brian is saying that,” then perhaps your level of concern isn’t much different than normal.

Either way, right now is a good time to take your financial temperature — here’s why:

1) The stock market and bond market are both having a correction.

Stock market corrections – i.e. drops of at least 10% – have happened historically on average roughly every 8 to 12 months, which makes these corrections quite normal. And while the best course of action is often no action at all, that doesn't make them any easier to digest when they do occur. Bonds often act as a safe haven during stock market corrections but inflation is doing bond prices no favors either right now. So while it’s not unprecedented, it is fairly uncommon to see both stocks and bonds declining at the same time in the short term.

2) This is when you learn your real comfort level with investment risk.

It’s one thing to check a box on a form about your risk tolerance at one specific moment in time. It’s another thing to actually experience that level of risk. While some concern is normal and expected, if what’s happening with your investments right now is keeping you up at night, you might want to re-evaluate the investment risk level you’re really comfortable with.

3) This is a great time to make sure your overall financial plan is still on track.

Most of my conversations with clients during a correction are to provide reassurance. I start with reassurance that their plan factors in these normal corrections and is built to take on the least amount of investment risk that still gives them the best chance of achieving their goals and priorities. I then provide reassurance that should any adjustments to their plan become necessary, I’ll be sure to let them know. These conversations usually allow them to quickly get back to what matters most – living their best life with a sense of financial comfort and confidence, rather than worrying about the short term fluctuations of their investments. 

So if you haven’t done so already, I’d encourage you to take your financial temperature. If you find it’s elevated, spend a minute or two evaluating why that might be and whether or not you should do anything to get it back to normal. And if that doesn’t do the trick, please know that I’m here and happy to talk through it with you.