By Wells Fargo Advisors
During times of heightened stress a person can quickly become overwhelmed and even struggle to do things that might be considered simple or obvious. It can be helpful to focus on the things you can control, to identify actions that you can take, and to complete those action steps.
Here are four action items an investor may want to consider completing during extraordinary (and ordinary) times.
1. Review your investment plan
Before you start making changes to your investment portfolio, the first thing you should do is consider your goals. Are you saving for retirement? Do you need to build a college fund for your children? Did a recent event create a need to adjust your plan? If your goals have changed or if you haven’t updated your plan in a while, set up a meeting with your Financial Advisor to review and update your investment strategy to support reaching your goals.
2. Understand your risk tolerance
After recent events, you may have a new definition of your tolerance for risk.
Risk is a key principle in investing. Some investments are riskier than others, but every financial decision involves risk. Risk is inescapable, so the key is to understand your risk tolerance and manage the risk you are taking, which should be based on your long-term financial goals. If your tolerance for risk has changed, review your strategy with your Financial Advisor and make sure you are still comfortable with the amount of risk you’re taking.
3. Stick to your plan
When the market gets volatile, investors often have an emotional reaction and may want to pull out of the market to try to avoid loss. Try to remember that moving or selling investments during a market decline will likely lock in the losses; staying invested may allow you to benefit when the market comes back. If you haven’t updated your plan in a while, set up a meeting with your Financial Advisor to review it and make any necessary adjustments.
4. Organize and update important documents
Are your important documents up to date and accessible to those who may need them?
Take time to create a reference list of your documents and consider creating a digital version for easy storage and accessibility. Also check that your beneficiary designations for investment accounts, life insurance, and other accounts are up to date to reflect any new circumstances such as marriage, birth, death, or divorce. Beneficiary designations typically supersede your will so you’ll want to confirm that your beneficiary designations are current and accurate.
Wells Fargo Advisors does not provide legal or tax advice. Be sure to consult with your tax and legal advisors before taking any action that could have tax consequences. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.
This article was written by Wells Fargo Advisors and provided courtesy of Katie C. Phifer, CERTIFIED FINANCIAL PLANNER™, and Associate Vice President-Investments in Beaufort, SC at 843-982-1506.
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