Now More than Ever, Stay Calm and Double Check Your Financial Plan

Few things can roil the financial system like global politics. 

Russia’s invasion of the sovereign nation of Ukraine shook markets around the world. And with good reason – it represents the most significant military movement in Eastern Europe since 1939. Investors are still trying to digest the impact of the invasion, and the long-term implications are anyone’s guess.

Energy prices were among the first to respond. Since Russia is a leading exporter of oil and natural gas, fears of a supply disruption sent prices soaring. The beginning of March saw crude hit $115 a barrel in the global markets and $112 a barrel here in the United States – the highest price since 2008. Grain prices jumped to their highest point since 2008. And the major indexes accelerated their ongoing drop with the Nasdaq coming close to a 20% dip that would have moved it into “bear” territory.

That said, U.S. markets are making up much of the ground lost since the initial scare. And a few offsetting factors should help alleviate some of the early shock; releasing oil from the Strategic Petroleum Reserve could help curb fuel prices, and rate hikes by the Fed may help mediate record inflation. But there is no quick fix on the horizon and both issues will continue to impact consumers and businesses for some time.

It's no time for panic

At times like these, it’s only natural for investors to feel stressed. Day-to-day movements in the market are always worrisome, and more so in times of uncertainty. But it’s important to remember that more often than not, these daily fluctuations won’t derail your long-term goals. Ask yourself: Where do you plan to be in 20 years? Do you truly see today’s changes in the market affecting that?

See importance of a financial plan

While it’s easy to push financial planning aside, moments of uncertainty like these are why we suggest that our clients have a financial plan. The goal of a financial plan is to help map out how best to achieve your goals and provide comfort and stability. If your plan is laid out, you’ve done the hard part, and now you just need to let it execute.

Financial planning helps you recognize the big picture. It can also help you become more strategic in your saving. And those benefits only scratch the surface.

Balance priorities. The right financial plan helps you understand the differences in your goals – whether it’s saving for a child’s college education or setting aside money for retirement. These and other long-term goals can easily turn into mere “hopes” without a sound plan in place.

Keep you on track. We all know how life likes to disrupt our carefully laid plans. It’s easy to get off track when bumps appear in the road. But having a plan helps you navigate these disruptions without compromising your goals.

Put your mind at ease. The future is stressful enough without worrying about money, yet financial fears haunt virtually everyone in one way or another. Having a comprehensive written plan breeds confidence. You can take one major stressor off your plate when you have your eyes on the larger goal and have a clear direction mapped out to get there. In fact, a recent Charles Schwab survey found that 65% of people with a written financial plan said they felt financially stable, while only 40% of those without a plan felt the same degree of comfort.

Sustain you through volatility. And that brings us full circle. Reading the headlines is enough to make anyone question their strategy. But the intent of a thoroughly thought-out financial plan is to help you ride the highs and lows without feeling seasick. 

It's time to check your plan

Hopefully, the turmoil in Europe will be short-lived. But the invasion of Ukraine isn’t the only thing that has people concerned about the markets; inflation, rate hikes, and a seemingly never-ending pandemic also play a role.

If you already have a plan and still find yourself overly anxious about market movements, it might be time to talk to your financial advisor. A financial plan is a wonderful roadmap, but it’s not carved in stone – sometimes updates and revisions are necessary. That’s why at CapWealth, we suggest an annual check-in for our clients.

Working with an experienced financial advisor can create a financial plan that gives you confidence in your long-term strategy and takes much of the worry out of market volatility.

Jennifer Pagliara, CFP, CTFA, is an executive vice president and financial adviser at CapWealth. For more information, visit capwealthgroup.com.