We all love a good recipe! Either to make ourselves or to share with that one good cook in our lives that will make it for us so we can enjoy it together!

I’ve learned that the best recipes in our lives don’t always pertain to food. But just like any recipe, your financial portfolio is all about the quality of the investments.

Today I’ll share three recipes for success that can help during these uncertain times. Inflation at all-time highs, the war in Ukraine, stock market volatility, and the pandemic are just a few aspects that are affecting our lives today. With all the uncertainty we are faced with, how can we move forward with a sense of certainty?

Three habits that can keep you on track or bring you back on track, in case you have fallen off:

Review your original recipe

When we get overwhelmed with life (and cooking) we tend to just move items around that come at us unexpectedly. Some examples can be forgetting to buy the parsley, which happens to me all the time, or more important life examples like changing jobs, getting divorced, or losing a loved one. Let’s say you had already planned that this year you were going to start contributing to an IRA on top of the contributions you were already making to your 401(k), but with this volatility, you are overthinking it so much you haven’t started the IRA. Yes, there is inflation, and you might be saying to yourself, will I have enough to keep my lifestyle if I put this money away? Maybe I should wait until there is a clear picture of where the economy is going before I start? These are valid concerns but, if you go back and look at your plan this additional money that you had assigned to your IRA is part of a long-term plan. You can adjust, but that doesn’t mean completely changing the plan. That is why the first step is to go back to your plan and understand why you were prepared to save more money this year. Look at your budget sheet and net worth statement, if things still look on pace, then let’s keep moving. Remember, if you remove the essentials in the recipe, you are making another dish!

Change up a few ingredients

We have heard of the 60/40 portfolio, which gives you 60% equities and 40% bonds and that worked when it did and has stopped working now. Then we moved to 70/30 to catch up to inflation, but with yields where they are, do we just keep moving the needle towards 80/20 or add a few ingredients? Alternatives and private equity have been given a bad name in years past but as they have evolved and become more accessible, transparent, and flexible maybe that could be your next move. We are trying to fill that void that is needed as volatility continues and we still want our money to grow. Alternatives can be a step in the right direction. These are the adjustments we talk about. There is no need to completely change the plan, only decide if you want to sprinkle other spices into your portfolio.

Stay informed with updated recipes

This means if you have reviewed your plan and made an adjustment here and there it’s time to sit still and be knowledgeable. Follow the events happening around us to understand what outcomes can be caused by them. For example, the past two years were full of major changes, some as simple as how we shop. Increases in retail e-commerce sales from 2019 to 2022 were drastic, yet we can see on the chart below how there is over 17% decrease from Q4 2021 to Q1 2022. These back-and-forth changes continue to demonstrate an unclear path but, regardless of brick-and-mortar sales or e-commerce sales, there are still purchases taking place. To keep up with the world’s advancements we must read, study, and connect with people so we can learn about how the world moves forward daily.

Uncertain times can get scary, but if we prepare ourselves and learn how to keep up with changes it will be easier to overcome. A key to being prepared for the uncertainty of the future is financial planning, which can allow you to use an uncertain time to grow, move forward, and build a better future, with self-growth and financial wellness. I am sure we all learned a lot about ourselves during these past years. Changes can be good, as they help us grow, evolve, and learn.

[1] ec_current.pdf (census.gov)

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