By Vincent R. Birardi, CFP®, AIF®, Wealth Advisor at Halbert Hargrove.

Investing, like life itself, is rife with uncertainty. Certainly these first six months of 2020 have “gifted” us with extreme highs and lows. Over the course of my adult life, and more deliberately in recent months, I’ve given a lot of thought to strategies that can help people stay resilient during the tough times.

I’ve boiled this down to five practical steps, which I detail below. With some planning and perseverance, these should help investors survive this current – and any – turbulent period with their long-term goals intact. Many of these steps are likely obvious to you already, but I hope you’ll find some practical wisdom among what you already know and practice.

  • Become a diligent saver and investor
    • Aim to save at least 10% of your take-home pay annually.
    • Contribute the maximum annual amount to employer-sponsored tax-deferred retirement plans, and also take advantage of employer contributions – free money!
    • Consider funding after-tax investment accounts such as a Roth IRA. This will enable you to take advantage of a sustained period of tax-free compounded returns prior to retirement or any required distributions.
  • Have a fully funded emergency savings account.
    • Based on your industry and overall job security, you should maintain a cash balance of 6-12 months’ worth of your average monthly expenses.
    • These funds should be maintained in a separate savings account. This will help to avoid the temptation of using these funds for non-emergency spending.

Fact:  Emergency savers are more likely to be successful in avoiding the need to use more expensive measures like credit card debt to pay for unplanned expenses.

  • Identify reasonable and measurable goals
    • It’s helpful to avoid overly simplistic goals such as “retire early” and “pay for college.” Find a way to measure your progress.
    • Get real with these goals – they should be attainable. And successful outcomes should be quantifiable.
  • Diversify your asset mix
    • Whenever possible, your portfolio should consist of a range of asset classes that offer a low correlation with one another.
    • Do not sell cyclical investments when they are out of favor!

A seminal read that fortifies this approach is Halbert Hargrove’s 2017 Death of 60/40. You can access it here:

  • Control your costs
    • Maintain an ongoing awareness of your non-discretionary (unavoidable) expenses versus what spending is discretionary.
    • Do not live beyond your financial means.
    • Track your expenses over time. Are there any obvious places to trim down spending?

How do you balance having the life you want to enjoy today with what you’re going to need in the future? Are you doing what it takes to enter your dream retirement? TAKE OUR QUIZ to find out.