In this episode, Mark answers: How do you prepare for a correction? You do NOTHING. If you are going to prepare you probably think you need to do the following:

  • Sell investments and put them in cash and hope for prices to come down
  • You may buy hedges or other investments that are counter intuitive to the stocks you own in your portfolio

The prep work has already been done once you have set the correct asset allocation for your goals. Corrections create the opportunity to invest more in businesses. Mark also answers a Facebook question: "I heard that a 529 college fund can hinder a student from receiving assistance from college/state/Feds. Instead of a 529, I started a standard brokerage account. Is that the best approach?” Everyone’s situation is different. If the money is in your own brokerage account there is more flexibility. You should have greater transparency and flexibility to options. There are tax benefits to 529 but they don’t outweigh benefits. Everyone is talking about stock market correction but not bond market corrections. The most important things to do to your portfolio, you do during a correction. Annuities lack flexibility and they come with lots of fees. If you have to own mutual funds and ETFs make sure you are rebalancing. 

November 7, 2017