How has COVID-19 affected the success of my financial plan?

It’s typical during market downturns like this one for clients to wonder whether their financial plan is on track. It’s especially true when you see the value of your accounts decrease. Some may even feel anxiety that, at current asset levels, you may not be able to accomplish everything that you had hoped. This is one of the many reasons why a financial plan is so valuable.

During the planning process, we perform a Monte Carlo simulation to gauge how your plan will respond to the stresses of market volatility. These calculations involve running a thousand scenarios of varying market outcomes and include subjecting your portfolio to a combination of both bull and bear markets over your lifetime.

It’s important to understand that the Monte Carlo analysis has zero correlation to current market conditions and is not influenced by where we are in the market cycle. This means that running the Monte Carlo at the peak of a bull market (e.g. January 2020) may inflate one's chances of success. Likewise, running the Monte Carlo in the throes of a bear market (e.g. March 2020) may underestimate a plan's success.

The bottom line: your financial plan has assumed tough times will come, and that they will be followed by better times, as history has proven. Our advice to you is to stay the course, but keep us updated on any major life changes or financial decisions. We’re here to support you through all of it.

Keep in mind, there can be opportunities that arise during a volatile economy and market that have the potential to strengthen your plan. These could include a ROTH conversion, mortgage refinances, or strategic asset allocation adjustments. As these opportunities arise, we will continue to deliver advice specific to your individual plan and wealth strategies.

Strategic Allocation Adjustments

Continuing with our prior communications, we want to keep you informed regarding investment strategy adjustments. This week, the Investment Committee of Slaughter Associates has continued making adjustments by…

  • decreasing exposure to global real estate
  • increasing allocation to domestic quality balance sheet

As more information becomes available we will keep you up to date regarding the Investment Committee’s thoughts and actions.

COVID-19 Market and Economic Commentary

On Friday, March 27, the Slaughter Associates Investment Committee presented a webinar covering:

  • Market and economic updates
  • COVID-19 spread and projections
  • Details of the relief package
  • Market volatility in context

If you missed the live webinar, you can watch a recording of that presentation from our website.