The most significant journey in a person’s life usually begins when they reach a crossroads.  At a certain point a person recognizes the need to understand his choices in relationship to his concerns, assess their available resources and account for the possible consequences as well as the potential benefits of his current investment plan or lack thereof.

A journey into emotional investing can begin in mysterious ways.  A profound thought may suddenly occur, you may read a book, see a movie or hear a story about someone – any number of random things can open up the mind to move forward and make a choice. Hopefully that choice is to help you place your concerns at the forefront of your planning for you future.  So what is emotional investing?  Unfortunately most people think emotional investing is very similar to how most people run their lives. Many investors get caught up in sensationalized headlines and buy or sell investments at the peaks and valleys of the market cycle due to fear and greed.  Plans are not well thought out and once we are invested we wish for the best.  That however is not a diagram for success but rather the first step on a journey of loss and despair. In the investing world, there is one uncomfortable truth in particular that few people like to talk about: Individual investors consistently underperform. The latest research from DALBAR not only confirms this, but reveals the gap to be especially wide. Over the past 30 years, the S&P 500 has returned 11.11% per year while individual investors have averaged only 3.69%. This report was published in 2014 using performance through December of 2013. The numbers are to be used as a guide to help show the inconsistency when emotions enter our investment decision making process.
    
But now what happens in the following scenario - the market is down and we are in control of our emotions and are willing to ride out the storm when the need for health related expenses arises. What happens now!  This is what I refer to as true “Emotion Investing”.  It is when we have planned for and invested our assets to provide the greatest benefit to our loved ones – those people who we are emotionally invested in – those people who may ultimately be taking care of you. It’s eye opening when we consider 95% of the population has no strategy for dealing with an issue that will affect 70% of individuals over age 65. In reviewing your current portfolios, here are a few questions to consider:

• If I need 12k per month to cover LTC expenses, what investments do I liquidate first? Second? Third?
• If the plan is cash, what's it presently earning? And what was the cost if I don’t need care?
• Considering health care costs are rising 7% - 8% a year, is that the best tool for the job?
• Have you ever assisted a loved one through this process or do you know someone who has?
• Is your spouse, child, partner, etc. aware of the plan? Especially, if they are the plan?

While the nation is enjoying the benefits of equity markets at record levels wouldn’t it be prudent to formalize a plan to try to insure that what you care about, is in order for those you care about while enjoying continuity in your life today? We often say that no choice is a choice.  So before you move on to the next thing on your desk or iphone ask yourself if you are you comfortable with how things are organized for you and your loved ones should you require long term care.

If you are comfortable with your current asset allocation and long term care plan and if the people who will be responsible for your care are aware and agree to the changes that may have to be made in their lives – then fine. But if you have any questions or concerns please feel free to  call John Ryan at 516-535-3420 because once you have moved to the next task in front of you today you have made a decision not only for you but for your loved ones. That is truly the meaning of emotional investing.