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Do Geopolitical Events Impact My Comprehensive Financial Plan

Do Geopolitical Events Impact My Comprehensive Financial Plan

4 Apr 2022

Endless discussion in the financial community focuses on how to mitigate geopolitical events. Industry experts concur that global economic events tie to nation-state fiscal and monetary policy. Yet, the debate continues whether such events should influence financial planning on the micro-level.  

You’ve worked hard for your money. The last thing you need is political or social disputes eating away at your nest egg. We are here to help protect and build upon your assets through all uncertainty.

 

Want a second opinion on the security of your financial plan? An Akron-Canton, Ohio financial advisor can offer investment advice after understanding your financial goals.

 

This article will help determine how global turmoil can influence your comprehensive financial plan and what to do about it.

The Impact of Geopolitical Events on Investment Returns

Though it might seem unfair, the global state of affairs does have the potential to increase or decrease your investment returns significantly. What events can deflate your retirement savings? 

  • Military conflict
  • Economic downturn
  • Social unrest 

The key is to prepare for these unforeseen events. The best approach is to get help from a proven fee-only CERTIFIED FINANCIAL PLANNER™ Professional for comprehensive financial planning.  

A CFP® acting as a fiduciary has a legal obligation to make all decisions in the client’s best interest. This supports transparency, honesty, and integrity.

Active investment management of financial savings will help strategically pivot your retirement funds when geopolitical events unfold. We follow all market conditions for you. This method ensures that funds are relocated to and from specific securities and investment vehicles: stocks, bonds, commodities, currencies, sector specific assets, precious metals, CDs, money market accounts, etc.  

Proactive financial planning sets the stage for you to build wealth even in a bullish market. With experienced active investment management, financial decisions made on your behalf are based on investigation, research, and analysis. 

A diligent team like ours looks for blind spots and vulnerabilities before events can knock you off course. Digging deeply into all aspects of your financial life, the best strategies can be found/applied to increase your wealth and save you money, such as: 

Mitigating Geopolitical Risk in the Context of Investing

There are respectable arguments on both sides of the debate regarding whether the geopolitical risk should prompt a dynamic approach or a stagnant one. Some industry experts insist it is best to hold tight and weather the storm without deviating from the original plan. Others insist it is prudent to pivot in accordance with the unique dynamics of the geopolitical event in question.  

Analysis of the results of both strategies reveals comparably low-risk assets categorized as “safe” provide better returns in the short-term compared to riskier investments. 

The moral of the story: it is to your highest advantage to entrust a fiduciary CFP® to actively manage your money, especially in times of war, terrorist attacks, natural disasters, and social upheaval. Shifting money out of risky assets to safer assets during such a period of uncertainty can lead to fewer losses or even gains.   Keep in mind your advisor can shift gears after events unwind, moving funds back into riskier investments with higher betas and elevated volatility. 

Of course, all of this will be based on financial markets and your risk tolerance. What matters most is that you align your financial fate with the knowledge and expertise of a wealth manager willing to alter your investments as necessary.

Recognize That Change is the Only Constant

There is no escaping market volatility stemming from geopolitical events. Even the mere anticipation of such an event can cause wild market swings. Your susceptibility to financial losses resulting from global turmoil should differ based on your timeline for retirement.  

If you’re retirement planning, utilize a CFP® to actively manage your investments with calculated pivots away from high-risk stocks and other securities. Your ideal investment strategy will differ if you are decades from retirement (with higher risk tolerance), your ideal investment strategy will differ. 

Whatever your situation, recognize the fact that there is opportunity amidst uncertainty. Seize the opportunity to add to your positions strategically—you just might buy at or near the dip. 

Above all, don’t lose sight of significantly higher markets that follow equity declines tied to conflicts in the ensuing half-year to year. However, it is a mistake to think you can time the market at the low point of its trough as the future has yet to be decided. What might seem like the bottom of the dip might be the halfway point.  

Consistency is Key

As our last piece of planning for investment management, you will need to be patient and rely on the trusted guidance of your financial advisor. This does require your commitment to the process. When in doubt, ask questions.

With experience navigating market peaks and troughs, abide by your advisor’s advice amidst geopolitical events. Have faith that you will likely emerge relatively unscathed or even in a better financial position in the political aftermath. 

Here’s How We Operate

At McGervey, we implement a full-cycle investment strategy, which includes investing for bear, bull, and in-the-middle market conditions. We strategically allocate your portfolio to the best sectors and asset classes (depending on the growth or inflationary period). Rather than focusing on short-term performance, we seek long-term financial success for you. 

 

Take 6-steps to your future with a comprehensive financial planning process: The McGervey Method™.

 

Schedule a meeting now to learn how an active approach can help you get in control of your money and achieve your goals, no matter the global state. We serve a wide variety of clients nationally and locally in the Canton, Akron, and Cleveland, Ohio regions. If you’re curious about our background, read about our history. 

We look forward to creating a prosperous future with you as we navigate these changing times. Call us today to discuss your comprehensive financial plan.

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More About the Author: Michael McGervey

Michael serves as a resource to executives and business owners, assisting them in making proactive and informed personal financial decisions. He is also a member of McGervey Wealth Management’s Investment Committee and is responsible for investment research as well as the execution of the firm’s portfolio strategies.