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  • Bob Brooks

The Most Important Investment Question to Ask Your Advisor

This is a very straight-forward conversation I want to have with you today. What I have written below, which should take you a whole 4 minutes to read, is easy to understand and important. Here is the question to ask your advisor (or yourself if you are in charge of your own retirement money):

If my retirement accounts start to lose a great deal of money, what are you going to do about it?

There are a few answers you could receive as a response.

Answer 1 - Hold tight, you are a long-term investor

That is the typical answer and quite frankly it's not good enough. Where does it say that it makes sense to lose -50% of your retirement money and just hold tight?

Reality - You might have a problem if that is the answer.

Answer 2: We have a strategy, this is what it is, this how it works, and this is how you will be protected.

Now we are getting somewhere. The problem is that most advisors don't answer this way. If you get answer 2, it is up to you to determine or someone you can run it past, that it is a reasonable strategy.

To further answer #1, the advisor might add - besides we are in a strong bull market and the market is forecasted to go up for _________ (fill in the blank) - the economy, tax cuts, indicators, etc.

Easy to understand truth - The stock market which determines the gain or the loss of most people's retirement accounts, alternates between long periods of gain and periods of loss. History (unless we are rewriting history) shows we alternate between good and bad periods. The good periods can be really good and the bad periods really bad for retirement savings.

FACT #1 As of August 22, 2018 the stock market will have been in the longest "good" period in history. Some stats would say we are # 2 in length. You get the point. It is historic.


See truth above


The #1 or #2 (depending on whose argument you agree with) longest "good" period on record was 1921 to 1929. Following that good period, the stock market went through a bad period where the stock market lost -86%. Now look past the sensationalism of that percent loss, things were different in the 20's to a certain degree. The point could be made that not only do bad periods follow good periods in the stock market. In addition, really good periods are followed by really bad periods.

So, what is the conclusion?

A bad period (if history is correct) is coming for the stock market. Are you set to go down with the ship or do you have an investment plan in place to weather the storm? Are you going to stick with Plan A or switch to Plan B?

This is a conversation you need to have with your advisor. Your retirement money might depend on it.

Bob Brooks is the host of the Prudent Money Radio Show and is a financial advisor. If you don't have an advisor or if you're unsure about your investment strategy going forward, Bob would like to talk to you about a strategy for an uncertain future history says is coming.

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