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What Can You Control?

Published by: Tim Eichhorn Date: November 20, 2012

You might have substituted the memorable 80’s alt‐rock band R.E.M.’s lyric, “It’s the end of the world as we know it…” in place of your favorite morning show anchor’s analysis as a new day dawned on November 7. The Presidential election and its aftermath was the hot topic. The impending doom of the “fiscal cliff” was being debated on‐air. The stock market was hit with two days of sell off, the C.I.A. Director resigned under personal scandal, and other Cabinet members started talking about their imminent departures.

Our government predicaments played out while the world news was not much rosier.  China showed more cracks toward recession. Europe sent buckets of money to Greece while riots continued in Athens. Syria devolved into a more ferocious civil war and Israel rattled their collective sabers loudly towards Iran.

Maybe it is the end as we know it.

Now, more than ever, your financial plan becomes the critical piece to preparing for the volatility that most of us expect. It is a plan:  dynamic, intentional, and designed with your goals as the centerpiece. Your plan is in place for stability in chaotic times and should insulate you from Presidential elections, riots in Greece, fiscal cliffs, and other things out of your control.

The point is, that in a world seemingly coming unhinged, there are things that you can control and your plan should address them.

Your plan can control:

Goals: Your plan should define what you want these accounts to do at a certain time in the future. Your plan drives the allocation of the monies in your savings and retirement accounts to self‐defined goals.

Savings: Your plan should define the amount you need to save and invest to fuel the growth toward your goals. Savings should be a key component of the planning process, and it should be regularly evaluated to verify that you are on track to your destination.

Risk: Your plan should also take into consideration the factors that drive market prices. A market raised to higher price levels inherently carries more risk. To offset that, your plan should have pre‐determined triggers that are in place to buy, sell, and rebalance with intentionality. Your plan removes emotion from the decision‐making process.

The events around us and the media discussion of them may cause worry and anxiety. But if we approach them through intentional planning, the crises,politicians, and markets will come and go and we will weather them as investors have for many generations. Remaining focused on those things that we can control allows for the peace of mind in knowing that we prepared for these times
in advance. My expectation is that we can then finish the remainder of the line from R.E.M. the same way that they finished it; “It’s the end of the world as we know it………and I feel fine”.