Sunday, April 1, 2018
Stick to Your Financial Plan for Long Term Wealth Accumulation
The holder of a BA from Samford University, Michael Mullis is the managing partner of wealth management firm Kelley & Mullis Wealth Management. Based in Birmingham, Alabama, Michael Mullis helps clients to develop financial investment plans and stick to them to ensure their long term financial health.
Stock market downturns can rattle even the most experienced investors. However, they should not keep you from making a financial investment plan for you and your family’s benefit. Equally important, a downturn should never push you to abandon an existing plan. Here’s why.
Studies have shown that the longer a portfolio remains in the market, the less volatility it experiences and the more wealth it accumulates. Looking at data from the past seven decades, the markets have recorded positive returns for seven out of every ten years. That means investors who stayed in the market longer accumulated more wealth.
This does not mean that downswings will not happen. They will. It also does not mean that once your financial plan has been created, it should be left unchanged for decades on end. On the contrary, any plan should be reviewed annually or when a life-altering event happens. What all this does mean is that you should develop the mental toughness to stick to your financial plan even when the market swings downward, because the statistics are solidly in your favor.