How will the state of geopolitical events impact your investments? It seems it is nearly impossible to avoid the news and the speculation of what will come with the current state of global politics. While a lot is uncertain, one thing we can prepare for is that our economy and the worldwide economy will most likely feel the effects of global unrest.

Today, we’ll cover how we prepare our doctors, how we can take advantage of a down market, and share some statistics that might help you get to sleep at night.

Expectations we want our doctor clients to have of the market:

Looking for, on average, 6-6.5% rate of return on investments
Roughly 1 in every 4 years, the US stock market has an overall negative year

Our Investment Philosophy:

We are investment managers; we do not believe in “timing the market”. Making decisions based on frequent market fluctuations could lose you 1-4% per year in returns.

Your Risk Tolerance Profile is set based on your age, career, and your current life goals. We translate that risk into investments in your portfolio. Stocks/Bonds are typically moving inverse of each other. If the market is up and stocks are going well, we buy bonds. In a down market, we sell stocks to rebalance accounts to maintain your preferred risk profile in market fluctuations.

Dollar Cost Averaging means that when investing large sums of money, we prefer to break it into smaller portions and invest over a length of time. This allows us to essentially buy at the average price over a period of time, instead of risking the lump sum on one large purchase and hoping the price was right.

What should you do in this downturned market?

Hold Your Ground

Avoid stock-picking, and trying to time the market. We know you’re nervous, but the market historically bounces back.

Roth Conversion

If you currently have an IRA, we want to move this to a Roth IRA. You do have to pay taxes on this conversion, because the market is down (including IRAs), therefore you’re paying less taxes on this money when you move it!

Runups after recovery

Vanguard studied returns following 8 international events from 1962-2016. On average the 6 months after the event the market was up 5%. And a year after, the market was up 9%.

Vanguard Geopolitical sell-offs are typically short-lived

If we look even further out after these types of events, we see higher returns. Dimensional Fund Advisors studied the total returns of 7 market downturns from 1987-2011 and the market response 1, 3, and 5 years after.

These events had an average return of:

4% after 1 year

23% after 3 years

52% after 5 years

Market Downturns are not new to any of us. Having an advisor in your corner means we will not balk. Just like everything we do, we believe in helping our clients make educated decisions about their finances. If you have any questions about your investment portfolio, feel free to reach out to us.

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CONTACT US

1-888-256-6855

Remember that you can send us any questions at: Info@MDFinancialAdvisors.com

Katherine Vessenes, JD, CFP®, is the founder and CEO of MD Financial Advisors who serve 500 doctors from Hawaii to Cape Cod. An award-winning Financial Advisor, Attorney, Certified Financial Planner®, author and speaker, she is devoted to bringing ethical advice to physicians and dentists. She can be reached at Katherine@mdfinancialadvisors.com.