Broker Check

How can I go forward when I don't know which way I'm facing?

June 15, 2014

How many times have you heard some­one at a backyard party or family gather­ing bragging about that stock that made them big money? Conversely, you may even have insisted that you need to go to cash because the world is ending (we all remem­ber early 2009) and of course cash, or gold, is what some guy on television said is the only way to survive. Well, you need to nod politely and then ignore the wizard of the barbe­cue and the guy on the tube. Why? Because they are not you. Nor do they know your situation. You have your own risk aversion or tolerance, your own bills and dependents, your own needs and wants, and your own financial plan. At least I hope that you have your own plan. The reality is that many people do not have a plan, yet that is the one thing that may keep you from making emo­tional and damaging financial decisions.

Keep in mind that a plan is not neces­sarily a restriction on your ability to take a little extra risk. It can actually allow you to take more risk; but only if appro­priate for YOU. Let’s say that the stock jockey starts to tell you that you really need to get into ABC Corp stock as it may be the next big thing. You can feel the fear of losing this ‘opportunity’ creeping into your decision process.

With a plan you will have parameters that provide an idea of what will happen if you make certain decisions. Hope­fully, this information will help to guide you to the decision that helps you to achieve your long-term goals. In other words, you can­not really know how much risk is ap­propri­ate for you or what actions to (not) take if you don’t know what your financial posi­tion is at the moment. Contact your finan­cial professional. Get a plan togeth­er. It is time for you to have all the infor­mation that you need to make good deci­sions when opportu­nities and challenges arise.

by Ronald Donato, Jr., CFP®, MBA
Director of Financial Services