At San Diego Wealth Management, we love investing. From an early age, I saw the power of compound interest in my college fund and found it fascinating. I admit to obsessively watching the stock market when I was a young adult, enraptured with each tend.
However now, the focus of my business is creating Financial Life Plans for our clientele. We identify their major life goals, take into account economic variances, including market corrections, then create a long term plan for our clients to reach those goals.
It may sound strange, but in Financial Life Planning, the dollars themselves become less important than what the dollars can do: a client may want to spend more time with family, perhaps time away from work, to enjoy hobbies and activities that they desire.
Investing for Financial Life Planning clients, is goal-based investing. These goals may be 5, 10, 15 or 20 years away. So, the short term market gyrations that once had me transfixed, have very little to do with my client’s portfolios reaching their potential.
Historically, our economy goes through a correction every year. (A correction is defined as a pull-back of more than 10%.) In fact, Sir John Tempelton once said that the four most dangerous words for an investor are “This time is different.”
This market correction, along with any other bear markets or recession that may come our way, will certainly pass. And it is not so different from many other market corrections that have happened since World War II.