The world certainly has changed dramatically over the last couple of weeks. We have been reading and watching the war unfold in Ukraine as you have and our hearts are with all those impacted by Russia’s aggression. It is difficult to comprehend the level of turmoil and strife the Ukrainian people are experiencing. The news of this global crisis is very heavy.
You may be wondering what the war and subsequent economic sanctions mean for you and your financial plan. Our short answer is “not much”, at least so far. The markets have been volatile. The economic sanctions are having an impact on the global economy, and will likely increase pressure on the supply chain, energy costs, inflation and banking systems.
We don’t think it’s helpful to focus on the current market volatility, since it’s so far out of our control. There are fear based headlines about the war and your investments, and we want to add our voice to the mix and reiterate our message. Our investment philosophy remains the same. We consider all of the following in our recommendations and encourage you to:
- Focus on what you can control; your saving, spending and tax efficiency
- Tune out the noise
- Diversify globally
- Maintain your asset allocation; rebalance once a year
- Keep enough cash on hand
- Reduce investment expenses and hold low cost funds
If you are interested, Vanguard compiled a chart showing what the US Stock Market has done in other times of global crisis. There is often an initial decline in the market and on average the investment returns 6 and 12 months later have been 5% and 9% respectively. We do not wish to downplay the deeply concerning behavior from Russia, we want to highlight that markets are resilient over long periods of time. We
advise you, our clients, to stay disciplined in volatile markets.
Please know we are thinking of you, your families and the world. We feel this is a humanitarian crises versus a financial crisis. Please let us know if you have any questions, comments or concerns.
Sincerely,
The Partnership Financial team – Rachel, Mark, and Jim
