Welcome to the April edition of Top of Mind!
When it comes to investing, the enemy isn’t fear—it’s catastrophizing.
A healthy fear of running out of money can motivate you to save and invest. But when fear spirals into worst-case thinking, it can lead to panicked decisions, like pulling the plug on your portfolio at the worst possible time.
Maybe this sounds familiar:
“If the economy tanks and I lose my job, how am I going to pay the mortgage? I might lose the house. I shouldn’t have money in the stock market… I could lose that too!”
“I’m retired and living off my portfolio. If it goes south, Social Security won’t even cover my bills and property taxes. I’ll have to go back to work…or live on beans!”
If those thoughts ring a bell, don’t feel bad. You’re not alone! Catastrophizing usually starts with a realistic concern. It just quickly gets blown out of proportion. And that’s when people make extreme moves that can hurt their long-term chances of success.
The good news?
You don’t have to completely change your thinking (that’s hard for anyone to do!) Instead, we’ve aimed to structure your finances in a way that gives peace of mind, so you can act from confidence, not panic. As a reminder, here’s how we do it:
1) Emergency Reserve
The old rule of thumb is six months of living expenses in a money market fund or bank account. Depending on your situation, it might be more or less. Either way, knowing there’s cash on hand for the unexpected helps you sleep better.
2) Insurance
What’s insurance for if not to protect against worst-case scenarios? Life, disability, property, long-term care—insurance helps take big fears off your worry list.
3) Diversification
Simple but powerful! If you’re invested with us, your portfolio is spread across a wide range of assets. No single holding can sink the ship.
4) Owning Quality, Reasonably Valued Investments
This one’s underrated! Quality assets might go down in a crisis, but they rarely stay down. Overpriced or low-quality assets, on the other hand, can stay down for a long time—maybe permanently. That’s a big difference.
5) Account Segmentation
This is the big one. We structure portfolios based on time horizons:
• Cash for short-term needs
• Bonds for intermediate-term spending (5–7 years)
• Stocks for long-term growth
That means your spending needs for the next several years aren’t tied to the stock market’s day-to-day movements. If stocks drop, we can use cash or bonds to meet your needs, giving stocks time to recover before you need them.
Don’t Keep it Bottled Up!
Following last week’s market crash, there is no shortage of investor worry today. In the past, we might have said, “Just turn off the news.” But with headlines flashing on your phone 24/7, that’s not realistic!
Our advice: lean on the plan we’ve built together, and let us do the worrying. If changes are needed, we’ll let you know.
And above all, if you’re concerned, let’s talk! That’s what we’re here for. Catastrophic thoughts tend to grow louder when they’re bottled up. If something’s keeping you up at night, let us know.
Thanks for reading this April edition of Top of Mind.
We hope you’ll join us at our Spring Shred-It Event: May 3rd from 10am–1pm at our Wexford Office.
Bring your sensitive documents and we’ll shred them securely on-site. We’ll also have a food truck from Sinkers and Suds, with coffee and donuts on hand. Stick around and say hi! You should receive a formal invite in the mail within days.
We hope to see you there!
Warm regards,
Kurt, Cassidy, Ken, Teresa, Brian & Jacque