Given our volatile economic environment and the U.S. stock market’s continuing negative trends, you probably wouldn’t be too surprised to learn we’re in a financial “danger zone.”

And we are. The challenges facing investors have not yet abated, and the time frame for the market’s inevitable rebound – as well as the rate at which recovery will occur – is unknown.

But here’s where the surprise comes in:

That’s not the reason we’re in a financial danger zone.

Today we want to share with you what the real danger is, and how investors can navigate their way through it.

Hindsight is 20/20

Let’s go back in time for a moment, to the start of 2020. You and I are sitting in our office, discussing your plans to save for a secure retirement. If we had a crystal ball, our conversation might go something like this:

“OK. So, we’re going to go through a global pandemic that will effectively bring about a complete shutdown of the economy – which we’ve never had before – and all the negative effects that go with worldwide financial upheaval.

And then what’s going to happen is inflation is going to hit 40-year highs.

And then Russia is going to invade Ukraine and talk of World War III is going to bubble up.

Oh, and the other thing we’re seeing is that we’re going to go through two bear markets; one in 2020 when the stock market tanks 30% plus during the pandemic, and the other 2022 when the markets crash by almost 25%.

So, what do you think? What are the odds the stock market’s going to be positive over the next two and a half to three years?”

The resilience of the stock market

Any rational human being listening to this prediction would likely reply, “There’s no way! Get me the heck out, and wake me up when it’s over!”

And they’d be wrong. Because as of this writing, all of these things have happened. We are still in the middle of some of them, or experiencing their aftermath. And, despite it all, the U.S. market continues to exhibit an upward trajectory over time. It’s still positive in the long term, and it’s still positive even in the presence of seriously adverse conditions.

This leads us to the bigger, even more important question: What’s the real risk that we’re dealing with? 

The real financial risk

We really are in a financial danger zone, but it’s not about returns or portfolios. It’s about the spike in our emotions when we can’t see the exact answers to questions like, “When will we get out of this economic downturn?” And because exact answers to these questions are unknowable, the underlying danger is that we will allow our actions to be driven by fear.

That’s when investors make the mistake of calling for significant changes in a portfolio that, if adhered to on a long-term basis, would give them a greater likelihood of supporting their retirement plans than interrupting their progress with the guessing game of when to bail and how to time their return.

The real risk lies in the long-term catastrophic impact that can accompany abandoning a solid, purposeful plan: not accruing enough savings to retire with a sense of security, running out of money during your retirement, or the prospect of leaving your family without the support and financial independence you want for them.

That’s where we come in. Think of us as your financial circuit breaker – it’s our job at N1 Advisors to safeguard you from the damage that can occur when there’s a surge or disruption that threatens to destabilize the system.

We’re honored to partner with you to help you weather the short-term challenges, however daunting, so you can stay focused on the long-term goals you’ve established for yourself and your family. Together, we can keep our perspective and purpose, and look forward to the benefits of consistent commitment to a strategically crafted plan for financial freedom.