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Does Your Investment Strategy Have a Sleep-at-Night Factor?

Wow, a month ago we had barely heard the word “coronavirus”, and now we are feeling its effects in the financial markets. We all know the wisdom of riding out these corrections by staying in the market, rebalancing, and waiting for the markets to recover — which they always do. In recent history, there was the tech bubble in 2000, and the great recession in 2008, both of which rewarded investors who stayed in the markets. But in the midst of living through a correction, that is easier said than done emotionally. Especially for retirees who are counting on their assets for income — they’ve got to last.

Because we specialize in retirement investment strategies for people age 60 and up, we are laser-focused on helping our clients buy the emotional time needed to stay in the markets and wait for the inevitable recovery. We call it the sleep-at-night factor, and we do it in 2 ways.

First, we use an investment bucketing strategy, segmenting assets into three time horizons — Now, Soon, and Later.

  1. The Now Bucket holds safe bank accounts used for emergency funds and planned expenses in the near term.

  2. The Soon Bucket holds conservative investments used for Phase 1 of a retiree’s income needs, including IRA Required Minimum Distribution requirements.

  3. The Later Bucket holds more growth-oriented investments used for Phase 2 future income needs. These assets can have more volatility because they aren’t needed anytime soon for income.

The most critical step is quantifying and establishing Soon Bucket assets. This is where most do-it-yourselfer’s and most non-retirement advisors miss it. To be ready for the inevitable years of correction, you need a conservative buffer giving you the confidence to stay invested. Otherwise, if your entire IRA is invested as a Later bucket asset while withdrawing RMD’s, your account is going to fare worse and take longer to recover, than if it was segmented and invested in two pieces – conservative and growth.

Second, we make sure our clients have enough guaranteed income sources that they can weather a market downturn. This can be a combination of Social Security, employer pensions, and/or lifetime income annuities. By calculating an Income Stability Ratio, we help clients identify what percentage of income they want guaranteed, regardless of future market conditions.

If you’re stressed out during these turbulent market times and want to talk more about how to make a recovery plan for your portfolio, contact us.

Financial Planning & Investment Advisory Services are offered through Marsh Wealth Management, LLC (“MWM”), an independent investment advisor registered with the state of Tennessee. Yvonne Marsh is an Investment Advisor Representative of MWM in the state of Tennessee. Marsh Professional Group, LLC is a TN registered public accounting firm and a separate legal entity from MWM. For a detailed discussion of MWM and their investment advisory fees, see the firm’s Form ADV on file with the SEC at


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