Page 24 - BusinessWest October 17, 2022
P. 24

Investing for the Long Run
The Benefits of Having a Financial Advisor During Volatile Times
BAy Barbara Trombley, CPA, MBA
s I write this article, the S&P 500 index,
which tracks the performance of 500
large companies in the U.S., is down almost 22% for the year. Even more remark- able is that the Barclays Aggregate Bond Index is down more than 14% year to date. If the average investor had a 60% equities / 40% bond portfolio that followed these two index- es, they would be down 18.8% for the year! This is without any portfolio or advisor fees.
After many years of positive stock market returns, this is extremely unsettling for the aver- age investor. Usually, investing in bonds or ‘fixed income’ serves as a buffer to the stock market by providing what is usually a more conservative return. This year, because of rampant inflation, the Federal Reserve has rapidly increased inter- est rates. Bond prices and interest rates move
in opposite directions, leading to large drops in bond prices and, therefore, a depressed bond market.
As a financial advisor, I wear many hats. The obvious one is that I provide investment guid- ance and strive to help my clients make financial choices. A less obvious role that I play is that of cheerleader. At times, some investors are very tempted to sell out of the market when times are bad. They feel nervous and uncomfortable. But history has shown us that investing is a lifelong
event. A financial plan needs to be followed in good markets and bad.
held at a loss in order to offset any gains held in other stocks. The investor can also offset $3,000 in ordinary income each tax year (if he or she has already offset gains) and carry forward unused
There is a J.P. Morgan asset-management study that shows that seven of the best ten days in the stock mar-
ket occurred
within two weeks
of the ten worst
days. Since Jan.
1, 2002 through
the end of 2021,
for example, an
investor who was
fully invested
in the S&P 500
would have
returned 9.52%
year over year (without fees). If the same investor missed the 10 best days in the market during that same time period, their return may have been 5.33% year over year (without fees) — almost half! An advisor will strive to provide guidance and education to prevent their client from mak- ing rash decisions.
Another area where an advisor can assist cli- ents during volatile stock-market periods (and other times as well) is, if appropriate, potential tax-loss harvesting. If an investor has money that is not in a retirement plan, they can sell positions
 “Sometimes during volatile market periods, an advisor may strive to counsel a client to change their withdrawal strategy from their portfolio or offer advice on large purchases that can be financed another way.”
     losses to be used against gains in future years. The investor would want to be aware of wash sales rules, which prohibit selling an investment
for a loss and replacing it with the same or a ‘sub- stantially identical’ investment 30 days before or after the sale. This would void the loss that the investor was deliberately trying to achieve. The investor is allowed to sell a stock at a loss and buy a similar one in the same industry so that he or she can continue
 to have their money
working for them. Continued on page 27
Finance
You Worked Hard to Save for Retirement.
Now What?
Barbara Trombley, Financial Advisor, CPA
Mike Trombley, Financial Advisor, Former MLB Player
      Since 1965
Call or visit our website
for more information:
(413) 596-6992 www.TrombleyAssociates.com
  3 Retirement and Estate Planning 3 Investments
3 Social Security Review
3 Tax Strategies
  Securities offered through LPL Financial. Member FINRA/SIPC. Advisory services offered through Trombley Associates, a registered investment advisor and separate entity from LPL Financial.
  24 OCTOBER 17, 2022
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