Your team at Harford Financial Group wants you to know that we are here for you, not just during turbulent times but every day. Our message is to remind you of the plan we put in place and encourage you to continue the course and stick to the plan. Your plan considers both times of market appreciation and times of market volatility.
On Wednesday, President Trump unveiled tariffs that have caused the stock market to experience volatility. The first quarter of 2025 was the worst quarter for the S&P 500 since 2022, and tariffs and the threat thereof contributed to this pullback.
Tariffs are taxes charged on the import of goods from foreign countries. Importers pay these taxes at the US customs agency. The impact of tariffs can include price increases on imported products, which can lead to higher consumer prices and erode corporate profits. This can create an incentive to buy a domestic equivalent and create shifts in global manufacturing.
Market volatility may continue as we navigate the changes that tariffs may bring. We want you to know that we are here for you and that we have a plan. When putting together your financial picture, we planned for times like these.
You likely have heard us talk about the bucket plan in meetings – Now, Soon, and Later.
Your Now and Soon buckets help during periods of stock market volatility. They are the more stable, conservative part of your portfolio. The goal is to fund any income you need in the short term with these dollars rather than have to sell stocks when they are down.
The Now Bucket is typically funded with bank accounts for planned expenses and emergencies. We want you to have this money set aside so you can sleep at night.
The Soon Bucket typically contains five to ten years of income need and is invested in a more conservative fashion. It helps create income without selling funds in your Later Bucket, which is stock-oriented during market volatility like we are currently experiencing. It also plays a critical role—that of a buffer for your Later Bucket, allowing time for the stocks in your Later Bucket to rebound and grow before they are used for income purposes.
The Later Bucket is stock-oriented and focused on long-term growth. In this bucket, we expect the volatility that accompanies investing in stocks. We planned for the volatility of this Later Bucket by the more conservative holdings of the Soon Bucket. This Later Bucket is intended for long-term income needs, typically ten-plus years in the future, allowing time for accounts to rebound from market volatility. The stock-oriented Later Bucket is the growth engine of the portfolio designed to compound over time, helping to grow wealth long term.
We hope this is a valuable reminder of the plan in place and provides some peace to continue sticking to it. We know that the turbulence in the stock market can cause worry and uncertainty. Your plan is intentional—we created it to support your income needs through both up and down markets.
We also want to remind you that even during uncertain times, opportunities are present. Investment opportunities to take advantage of market dips through asset allocation, Roth conversions, and tax basis management all exist and can be utilized to your benefit during periods of volatility. These are all tools we can leverage to assist you in reaching your long-term goals.
*No investment strategy, such as asset allocation, can guarantee a profit or protect against loss.