By: Andrew Rosen, CFP®, CEP®

Alright, week five has arrived and I have no beard anecdotes to share. However, I did get a puppy!

As if three young children weren’t enough, I, Andrew Rosen (who’s never had a pet in his life) got a puppy for my kids. If my house wasn’t complete mayhem before, this may put it over the top. Honestly, the closest thing to a pet I ever had was when I won a gold fish at the town fair as a kid. My mom was carrying my prized pet when a bee started chasing her. Sadly, poor little Goldy was the casualty and never even made it to the car.

I’m happy to say our new puppy (Matzah Ball) is healthy and my kids love him!  Oh and as of writing this article he has outlived Goldy.

Again, on to the topic at hand. There are few questions that I’ve gotten in my almost 20 years in the business that have been as difficult to answer as the one I keep getting lately. With a handful of clients sitting on a decent amount of cash, they’ve been waiting for this opportunity to buy in on the dip. I’ll reach out to them, as that was always the plan, but then the conversation doesn’t go as expected.

It’s then that the “question” comes up.

“Andrew should I invest these dollars now or leave them in cash with everything going on?”

From there, a rabbit hole of dialogue inevitably ensues before we get to the answer. Unfortunately, the answer is not so cut and dry. There are pros and cons to both. Here’s how I’ve framed the conversation to hopefully get the best answer.

  1. First and foremost, do you have enough cash in your emergency account? Typically, the answer should be 3-6 months, however, I’d say erring on the side of caution is wise. I think making it somewhere in the 6-9-month range makes sense.
  2. Next in this thought process is how secure is your job? I know no one knows for sure, but I think most of us have a good sense where they fall. For instance, I don’t plan to fire myself any time soon. If you feel fairly confident about your work situation, then I think there’s a good case to still consider investing.
  3. Do you need these funds soon? If you want to get into the market to get a quick pop, but you’ll need these funds in a year, I’d reconsider. We’ve seen unprecedented volatility these days. I wouldn’t want to risk those dollars for the short term. If that’s the case, leave it in cash as a bird in the hand is worth two in the bush.
  4. Will the markets drop further?  If you made it to question four than you have plenty of emergency funds, a comfortable job, and a long-term mindset. Now you’re at the toughest question to answer. Is it the right time? Since I can’t honestly say what the markets have in store, I turn to what I do know. If you bought today and have a long-term mentality, you’re for sure buying at a 15%-20% discount. What that tells me is you can’t screw this thing up too badly. I also know that we’re not out of the woods yet and there are likely some choppy roads ahead for the short term. So, I’d say now is definitely a good time to invest, although there may be a better time in the coming weeks. That said, there are a lot of ways to approach buying into the markets. You can go all at once, in stages, or pick a certain number to invest per occurrence. There’s no truly wrong answer, except not having a plan from the beginning. I understand information is moving quickly, and if you don’t have a plan, you’re likely not going to have good execution.

What are you going to do?

All these questions above lead to the final question, what are you going to do? I’d highly suggest not only thinking through the questions above, but discussing with your financial planner. My partners and I are in a position to help talk through these difficult decisions. It’s hard to come up with the best answer in a vacuum. Heck, I wouldn’t even give you my answer until we had a nice conversation on your situation. I find it’s these discussions that inevitably lead to the right answer for you.

In his role as Financial Planner, Andrew forges lifelong relationships with clients. He coaches them through all stages of life and guides them to better achieve their life goals. Andrew loves helping others by spreading his knowledge on finance, investments, and the pursuit of happiness/fulfillment. He writes nationally recognized, weekly blog posts on these topics and is a regular contributor to Kiplinger. Andrew has been published in The Wall Street Journal, Barron’s, Financial Advisor Magazine, US News & World Report, USA Today, CNBC, along with many other publications.

For more information or to book a consult with Andrew or the other firm partners, Kyle Hill and David Levy, click the link below.

Andrew Rosen, CFP®, CEP®
Kyle Hill, CFP®
David Levy, CFP®

Financial planning and Investment advisory services offered through Diversified, LLC, a registered investment advisor. Securities offered through Securities Service Network, LLC, Member FINRASIPC. Some associates of Diversified, LLC are registered representatives of Securities Service Network, LLC, a registered broker/dealer, 9729 Cogdill Road, Knoxville, TN 37932. (800) 264-5499.