Since last week was the worst decline in the stock market in the past few years we thought you might appreciate a quick note. While a number of pundits have been vocal in providing an explanation, I don’t know that the underlying cause really matters. The reality is that there’s been a decline of around four percent and most likely we’ll see more declines in the future. Of course, we don’t know when or by how much further, but once again, I don’t know that it really matters.

What does matter is for you to know there’s a plan in place to deal with the ups and downs in the stock market. Since this is a message to all our clients, let me explain the plan for our two most common investment goals – growth or income. For growth-oriented portfolios, any decline in the stock market is an opportunity to purchase more shares at a lower price.

Ultimately, it’s our belief that a well-diversified portfolio will generate positive returns but those positive returns are only available to the patient, disciplined investor. Having a plan provides the structure to maintain discipline during uncertain times and focus on the ultimate goals of the portfolio rather than short-term volatility.

For clients relying on their portfolios for income, it’s the same underlying beliefs but we also recognize the need to provide a sustainable amount of income that’s not contingent on the short-term performance of the stock market. To accomplish this goal, every client making withdraws from their portfolio has a significant part of their investments held outside of stocks.

This “safety net” of assets in cash and bonds represents a specific number of years of withdrawals such that no stocks need to be sold at a loss during a market decline. This approach served our clients well during the turmoil of 2000-2002 and 2008-2009 which were significantly worse than what we’re seeing now.

Whether your goal is growth or income, there’s a plan in place to navigate you through the choppy waters of investing. Sometimes just knowing this can be a relief, but at other times you may want some more reassurance. We’re here to help and encourage you to reach out if you have any questions or concerns.

I’d also like to express my gratitude as 2014 comes to an end. We’ve accomplished some wonderful things this year and look forward to an even better 2015. Thank you for being a part of the FSG family!

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