Important Questions YOU Need Answered (part 1)

Michelle Bertram and Beverly Bertram are financial advisors living in Mineral Point WI and serving the surrounding communities. Michelle Bertram does financial planning for retirees along with business consulting. Beverly Bertram specializes in retirement planning and income planning for her clients. Michelle Bertram and Beverly Bertram are authors of the book, Creating You DREAM Retirement and creators of the DREAM Retirement Process. Serving Madison WI, Verona WI, Mount Horeb WI, Barneveld WI, Dodgeville WI, Dubuque IA, Platteville WI, Lancaster WI, Cuba City WI, Fennimore WI, Darlington WI, Monroe WI, Spring Green WI, Black Earth WI and beyondThere is lots of talk out there about the market as always. Experts debating on what will happen and when will the market go up or down? Will the feds change rates? What will happen to the market if this or that happens…

All that makes for good news and conversation, but it doesn’t address the most important question, how will any of that affect you personally?

Just recently, Sarah* come into our office and ask us that all-important question, “If the market falls, how will it affect us?” The last part is the most important. We know markets will go up and they will go down, for most individuals, it is not about beating a benchmark, it is more personal. How does it affect you?

The answer is different for everyone. For Sarah, a loss in the market would not affect her retirement income, so some advisors would say that a market loss wouldn’t affect her, and they would be wrong.

Saving is something that was a priority for Sarah and her family. Her mom taught her when she was young how to save, she, in turn, taught her children the value of money and the importance of saving. The value of a dollar, the sacrifices made to save what she had accumulated made it important to her to protect her nest egg.

We talked about her personal benchmark, how much she would like to earn per year and the most she would be comfortable losing. Then, we did a risk assessment to see how her portfolio compared not just to the market benchmark, but most importantly her personal benchmark.

We found it didn’t meet her benchmark at all, in fact, the downside risk was over 6 times what she was comfortable with. While losing that amount would not affect her retirement income, she said it would greatly affect her sense of financial security. It would cause her great stress and anxiety, just seeing the number on a page caused her blood pressure to rise.

For others, a market loss means more than stress and anxiety, it would literally break their financial security. For some it would mean taking less income in retirement, going back to work or delaying retirement. These are REAL risks, real effects of a market loss on you personally. The talking heads would not be affected this way, the market is not a person, it would not be affected this way but that doesn’t mean you are not affected personally.

So, how would a market correction, a bear market affect you personally? What is the dollar amount of risk in your portfolio? If you don’t know, you need to find out to make the financial industry work for you.

*Name changed for privacy