Amy & Dan Smith's Planning for Life: Six Things to Know to Weather a Market Downturn

It’s natural to be nervous when the markets head for negative territory. Keep a positive perspective with these six investing reminders.  It can be very unsettling for investors when their portfolios and the markets start heading for the red and fear sets in that all you’ve worked for and set aside for retirement and other goals could be at risk. Here are six investing basics to keep in mind during volatile times:

Periods of volatility are normal – All markets move in cycles and periods of steep contraction are completely normal. While the length of market contractions varies, periods of growth and expansion are usually waiting on the other side. Since 1973, stocks have fallen more than 10 percent and subsequently rebounded eight times.

Don’t Panic – Letting emotions dictate your investing strategy is a risk you should not take. Short-term decisions can have long-term consequences on your portfolio. Being patient can pay dividends.

Know your portfolio – Understand your investments and how specific investments represent different goals and outcomes. Keep in mind your risk tolerance and investment timeline, and if either has changed, consider talking to your financial advisor about rebalancing your portfolio. Diversification can potentially help balance risk during a downturn and mitigate extreme swings in value.

Stay the Course – Remember your financial plan and long-term goals and stick to them. A disciplined investment approach is the best strategy for handling market downturns and will likely enable you to participate when the markets rebound.

Consider opportunities – Working with your financial advisor, determine whether periods of volatility are a good time to take advantage of investment opportunities in line with your long-term plan.

You’re not alone – Your financial advisor is available to help you when you need it. He or she can guide you through difficult markets and be the independent voice and “information bodyguard” that helps you stay focused on your long-term goals.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.

Amy & Dan Smith's Planning for Life: When the Road to Success Leads Back Home

Despite our best efforts, sometimes grown children aren’t quite ready to enter the real world.

The day our children move out of the house, graduate from college, or land their first full-time job isn’t always-or even often-the day they achieve independence. Life is full of twists and turns, and even young adults with the best laid plans can veer off course, turning to their parents for support when things get tough. One study, conducted by Arizona Pathways to Life Success, says that half of recent graduates ages 23 to 26 depend on their family’s financial support to meet their current needs.

There are many reasons why an adult may want or need to return to their family home. Difficulty finding a job after college ranks high on the list, but divorce and layoffs could factor in, too. And of course, you’ll want to help. But what happens when your soon-to-be divorced son escapes into video games, instead of searching for an apartment? How can you make sure your home is a launching (or re-launching) pad rather than an endless vacation?

You may be willing to welcome your children back home with open arms, a full refrigerator, free laundry and more, but there’s a fine line between helping and enabling. So what's a loving parent to do? It seems the answer lies in boundaries.  And the time to set them is before your children lug their suitcases back over the threshold. Let’s take a look at some of the things to keep in mind if you or someone you know finds an adult child heading home again.

Be Realistic
Returning home as an adult doesn’t carry with it the same benefits and privileges of childhood, for good reason. As parents, it might be your instinct to give your loved one as much as you can-the way you’ve always tried to in the past. But many adults supporting family members overestimate their ability to give and don’t think about how long they’ll be paying to feed another mouth.

Worse, many don’t think through what it could mean for their futures. They raid their own savings and retirement accounts, often using more than they intended to, and ignoring the fact that they may not have as much time to make up for the losses. Remember, too, that having less than you’ve planned for can greatly affect your quality of life in retirement.

To avoid this, try sitting down for a few hours as a family. You’ll need to discuss whether or not you can (or will) fund your child’s nonessential, such as trips, cellphone, entertainment and clothing expenses. If your new housemate is able, ask them to pay rent, help with bills or split the chores to ease the financial and physical burdens. Doing so reinforces responsibility-with the added benefit of putting into practice essential budgeting and money management skills. Creating a financial plan with your son or daughter also could help keep disagreements in check later on. Try turning to your advisor for help determining how you can strike a balance between assisting your children and making progress toward your own goals.

Should your meetings get a little contentious, try taking a break for a few hours, or even postponing the conversation until a day when everyone’s spirits are higher. As money issues arise, ask your advisor if they can offer some financial education to your children. Their objective guidance, along with your support, might be the push your loved one needs to rejoin the real world. Wherever your conversations end up, focusing on the love that you share will help guide you toward the right path for your family.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.