Planning for Uncertainty

by Ron Bare

Early in my career I remember hearing that it is wise to plan for the “Certainty of Uncertainty”. As a financial advisor, this really resonated with me.  Reflecting on that phrase now, after 30 years of experience, including various times of uncertainty, I firmly believe in the truth of that wisdom.  When economic or market uncertainty is elevated, we believe in the importance of going back to values and principles to help you make wise financial decisions. And here at Bare Wealth Advisors, we believe the best values and principles to apply are those that are grounded in Biblical wisdom. Here are a few to consider during times of greater uncertainty:

1. Think Long-Term. A long-term perspective is very important to consider when thinking about investment decisions. The longer your perspective is, the better financial decisions you will typically make. Investing in the ownership of companies (which is what you do when you invest in the stock market) carries risks of economic and financial events. When you step back and look at the long term, investors are often rewarded for the risks taken. (Proverbs 13:11, 28:19-20)
   
2. Diversify your investments. In our planning process we intentionally build our portfolios across various industries, sizes of companies and countries to help ensure diversification.  We use various professional managers with many years of experience. In addition, we typically hold 5+ years of cash needs (or income) in more conservative investments that are not subject to as much market volatility in the short term. This allows investors to apply principle #1 – think long-term. (Ecclesiastes 11:1-2)
   
3. Minimize debt. When a company or individual has minimal debt levels it reduces risks to their overall plan and future when uncertainty happens. (Proverbs 22:7, 26-27)
   
4. Increase Generosity. We talk a lot about generosity at Bare. We believe being generous is one of the most important biblical principles to apply to our finances. Generosity takes a step of faith, it helps us to learn to trust God and be grateful. When we live with open hands and are generous to those in need, we are reminded of how blessed we are. Times of uncertainty are great times to consider how to be a blessing to others. (1 Timothy 6:17-19, 2 Cor. 9)
   
5. Increase Margin. Financial margin can be vastly underrated. When you have margin in your monthly income and margin on your balance sheet it gives you a chance to take advantage of market volatility. Most people have heard the phrase “buy low – sell high,” but many are not prepared with margin to implement this when opportunity arises. (Proverbs 6:6-8). A good way to increase margin is to live within a budget to ensure that you have excess money to save and invest each month. Additionally, it is helpful to hold some cash in a reserve account for unexpected expenses as well as unexpected opportunities.

As always, we are here to talk to you about your personal financial and investment plans. We care about you and your family and remain committed to helping you steward your resources according to your God-given purpose; assisting you to make a significant difference in this world! I will leave you with a few quotes from two famous and successful investors:

Warren Buffet – “If you aren’t willing to own a stock for 10 years, don’t even think about owing it for 10 minutes”

John Templeton – the four most dangerous words for an investor “This time is different”