Avoiding All Wealth Losses

Remember, NOT losing dollars has important economic benefits through the power of compounding, and you can’t create wealth unless you preserve it first. A dollar is a dollar. In other words, a dollar lost to a market decline has the same impact of a dollar lost to overspending, investment product fees, or unprotected property losses.

Anxiety about market declines in many ways is misplaced. Bear markets are much shorter than bull markets. And, when a bear market does occur, there are both governmental and monetary tactics that can be deployed to shorten its length and minimize its impact. Keep in mind, too, that a portfolio only loses actual wealth when market losses are realized through sales. With an advisor watching over a client’s portfolios, it’s uncommon that these clients would divest in a panic. The normal course is the paper losses turn back into gains as the market turns positive.