Lack of planning could cost you

Put risk front and center when considering investments.

Don’t dream about a mega-return that may quickly realize your financial goals. Rather, steady your focus on the negative. Analyze and think about how your investment dollars could disappear – and then create a plan to prevent that from happening.

That’s 2021 drumbeat played by the financial press. From Forbes, MSN.com and US News and World Report to Rich Dad Poor Dad’s Robert Kiyosaki, financial leaders are issuing another round of encouraging prudent caution as investors consider where to put their money resources.

Understanding risk and bracing for its potential impacts is crucial, they indicate.

“Take the time to understand your entire financial plan,” Chad Staskal, CEO and managing partner of Eagle Wealth Management based in Bend, Oregon, told MSN.com in an article discussing how financial advisors should approach 2021. “Every investment has pros and cons, specific tax consequences and risk associated with it. Each portfolio should be individualized based on personal goals, income needs, risk tolerance, tax situation and economic conditions.”

All of this warning despite the fact that the stock market has rebounded from the pandemic – or at least that’s what it appears to be the case as of this writing. As we have discovered from 2020, nothing is written in stone. The world can turn upside down in a heartbeat.

For example, read the hindsight from a longtime financial advisor:

“No one thought they needed an enormous supply of disinfectant until a year ago and by this time it was too late,” remarked Marc Lowlicht, CEO of Opes Private Wealth Management based in East Hampton, New York. “It is not what you expect that you need to prepare for. It is what you don’t that you need to be ready for. If you don’t plan for risk, it is too late once it hits.”

Lowlicht said all plans for his clients are designed around risk.

“At Opes we manage risk first and everything else after,” he said.

He believes that approach gives his clients greater security in choosing their investments and the willingness to ride the waves of volatility that characterize the modern stock market.

Making risk analysis a top priority, Lowlicht sees his actions bring about another development: clients become less emotional in their decision-making.

“With each and every correction,” he said, “the client becomes more educated and comfortable in dealing with the ups and downs of the markets and therefore less emotional and more rational in their decision making.”