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Are your investments in all the right places?

Last December, most investment values took a nosedive. At that time, many people asked me if I thought their investments would continue to plummet. They were concerned that the nation might slide into a recession in 2019.

The outcome for most investors was good. Their accounts bounced back and they not only recovered from last year’s downturn, they actually made significant gains. And, by the way, our country never fell into a recession.

Exactly one year later I’m being asked the same questions. Will there be a recession in 2020? Will our investment values fall off a cliff? My response this year is the same as last year.

Economists can look at all their charts and graphs, investment experts can analyze all their data, but at the end of the day, nobody can say with certainty what the future will bring. The economy always has and always will act in unpredictable ways.

That’s why investors need a long-term financial blueprint. One that’s structured to benefit from market increases and at the same time protect against any financial fallout.

This generally requires two things: You need to have a diversified investment portfolio and an iron stomach. It doesn’t mean having a positive game plan only when the market looks strong, or bailing out of the market when things appear to be bleak.

For example, if you bailed a year ago you likely experienced a double-digit loss in 2018 and missed a significant gain in 2019. In simple terms, most investors would have been better off riding out last year’s financial storm.

That being said, there are some people for whom I have genuine concerns in 2020. High on the list are people who intend to make a big-ticket purchase in 2020, like a house. If house shopping is in your plans for the upcoming year, the money allocated for a down payment should not be subjected to the daily ups and down of the markets.

Those down payment dollars should be safely earning interest in a bank or credit union. In fact, they should have been on the sidelines long ago. My rule of thumb is that money you intend to spend within thirty-six months should not be tied up in long-term investments.

I’m referring to items such as down payments and upcoming tuition bills. If they’re on your list, now would be an opportune time to take those monies off the table and deposit them into cash.

Another concern involves recent retirees transitioning from the accumulation stage to the distribution stage of life. Many people decide to retire when their nest egg hits a certain dollar amount and have no plan for distribution. If the markets take a downturn and they have to draw on their investments for income, their nest egg can diminish quite rapidly.

Many investors have difficulty transitioning from years and years of accumulation to the distribution phase. If you are at or near this transition point, I strongly suggest you meet with a qualified advisor and devise a plan of action should a financial downturn occur.

Proper financial planning requires that you be prepared for boom times, bleak times and everything in-between. Whatever 2020 brings, I’m confident that this column can provide useful information to help guide you through the ups and downs.