How Much of Your Portfolio is in the Stock Market?

By January 2, 2015The Friday Brief

2014 marked another good year for the stock market.  With a 13.7% gain including dividends, the S&P 500 finished in positive territory for the sixth year in a row.  The market never goes up in a straight line and 2014 was no different. Several major geopolitical events including Ebola, ISIS, plummeting oil prices and the Russian invasion of Ukraine caused volatility during the year.   In fact, the S&P 500 fell 7.2% from its September 18 peak before bouncing back in late October and November.   Here’s a chart of the S&P 500’s 2014.

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As you can see, those who were able to ride out the market’s ups and downs were rewarded.   2014 was a great example of how the stock market works over the long term.  Investors willing to ride out the inevitable ups and downs are rewarded with the inherent growth of quality companies and the appreciation that is required to fund the goals that are most important to them.  Often sticking with the market is easier said than done.   Having the fortitude to maintain ones portfolio during times of market volatility is tough – we all know that by now.  Therefore, it’s important to make sure that your portfolio contains enough stock exposure to ensure that you are on track to accomplish your goals but not so much that you aren’t able to maintain it during times of volatility.

No one knows what 2015 has in store for the stock market but we can be sure that there will be more volatility as the Federal Reserve contemplates raising short term interest rates, Europe struggles with potential deflation, oil prices continue to fluctuate and growth in the Chinese economy faces headwinds.  Not to mention events that aren’t yet on our radar screen.

To revisit an analogy we use often, think of your portfolio as a vehicle to get you from point A to point B.  The stock in your portfolio is the engine powering the vehicle .  The bonds are the shock absorber cushioning your ride as you drive over the inevitable bumps in the road.

Do you know how much of your portfolio is invested in the stocks?  Now would be a great time to review your investment portfolio to make sure that you are driving a vehicle that has the power to get you where you want to go but also the comfort to ensure that you can survive the trip.

Let us know if we can help.

 

 

Author Geoff Hall

After two decades of practicing wealth management, multiple bull and bear markets, an internet bubble, a financial crisis and everything else in between, I have come to understand certain truths. The stock market can be volatile and it’s best if you prepare ahead of time. The less you pay in taxes and expenses the more of your money you keep. Outside perspective is a very good thing. Having a good financial plan as your frame of reference goes a long way. Based on these truths, my value proposition is elegantly simple yet profoundly effective… I strive to listen to my clients like they are the only person in the world so that I can best understand what is most important to them. I work diligently to control the things that can be controlled in the investment process like taxes, expenses and market underperformance so my clients can keep more of their hard earned wealth. By creating and continuously monitoring a plan for each of my clients I ensure that they feel confident that they are on track to do more of the things that are most important to them. I offer my clients independent, unbiased advice in a language that they understand. My beautiful wife, Crystal, and I have a two year old son, Cooper, and we just welcomed our daughter, Rhodes, into the world. When I’m not spending time with them you might find me downtown serving at our church, pushing my limits at an F3 workout or having coffee with a friend in the Five Points area. I have been given the privilege of shepherding my family of clients through the ups and down of the markets and of life for that matter. And for that I am thankful.

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