Keep a rainy-day buffer to stay sunny about the future of stocks

INVESTING

If you choose, there are always plenty of worries to be found in financial news.

On the current docket, you could worry about a government shutdown. This possibly could happen in a few weeks unless Congress comes to an agreement.

One also can ponder how our country and the world may get pulled into wars and how this may impact the investment world.

Then there's inflation. Albeit inflation is lower than a year ago, there still are concerns it could go up again, or at least linger.

And how about a possible recession? This was a common expectation a year ago, but maybe it just got delayed.

Of course, next year is an election year, which is great fodder for fear, regardless of political persuasion.

And if this isn't enough to catch the investor, one always can raise concerns about share prices being high by one measure or another.

Note that all these concerns can be plausible trouble spots. That's what can make them worrisome.

Unless, maybe, you have years' worth of spending money tucked away in something stable, like CDs, money market funds, or U.S. government bonds.

If any of the above trip wires cause harm, you will be able to leave stock investments alone and give them the opportunity to recover.

I think of it this way: History shows that a broadly diversified portfolio of stocks may go down significantly, but historically, it doesn't stay down.

Having a rainy-day buffer can allow you not to worry about nearterm drops whether caused by any of the above concerns or something else.

Good luck.

Jorgen Vik is a certified financial planner and partner with SKV Group LLC. Investment products and services are offered through Wells Fargo Advisors Financial Network. SKV Group is a separate entity from WFAFN.