Market volatility refers to the rate at which the price of assets increase or decrease for a given set of returns. High volatility means that the value of an asset can dramatically change in a short period of time in either direction.

In contrast, a market crash is a sudden and significant decline in the value of the market, typically by 10% or more, within a very short time frame, often a single day or a few days. Market crashes are often driven by panic selling and can lead to a bear market, which is a prolonged period of declining market prices.

While the recent market activity has seen increased volatility, it is important to understand that this does not equate to a market crash, despite some alarmist headlines. Volatility is a normal part of market behavior and can be influenced by a variety of factors, including economic data, geopolitical events, and market sentiment.

While the recent increase in volatility has been unsettling for many investors, it is important to acknowledge that market behavior is inherently unpredictable. More volatility could be ahead, potentially signaling the beginning of a deeper downturn. However, it is equally possible that markets could rebound and resume their upward trajectory.

Predicting market movements is a complex task influenced by countless variables. Investors should be cautious about making decisions based on short-term market fluctuations and should instead focus on their long-term investment strategies.

Given the complexities and uncertainties associated with market volatility, it is highly advisable for investors to seek professional guidance. A financial advisor can provide personalized advice, help develop a robust investment strategy, and offer emotional support during turbulent times. Advisors can also assist in navigating tax implications, estate planning, and other critical aspects of financial planning.

While recent market volatility can be unsettling, understanding its causes and how to manage it can help investors stay the course. By adopting a long-term perspective, diversifying investments, and seeking professional advice, investors can navigate volatile markets with greater confidence.

In the vast landscape of financial markets, where uncertainty and volatility reign supreme, navigating the path to wealth accumulation can seem like traversing a treacherous terrain. Yet, amidst the myriad of investment strategies and methodologies, there exists a guiding principle—one that promises not just returns, but returns that are optimized relative to the risks undertaken. This principle, known as risk-adjusted investing, is the cornerstone of sound wealth management, offering investors a roadmap to unlocking higher returns while mitigating the inherent perils of market fluctuations.

Imagine this: You've diligently saved and invested your hard-earned money, entrusting it to the whims of the market in hopes of securing a brighter financial future. Yet, despite your efforts, you find yourself facing a disheartening reality: your portfolio's returns are lackluster, failing to keep pace with your expectations, or with the benchmarks. It's a scenario all too familiar for many investors, where the promise of wealth creation seems tantalizingly out of reach. Fear not, as there exists a beacon of hope: the philosophy of risk-adjusted returns. Let's explore how embracing a risk-adjusted portfolio can offer the potential for higher returns without subjecting your hard-earned capital to undue risk.

At its core, a risk-adjusted return is a metric that evaluates an investment's performance relative to the level of risk undertaken to achieve that return.

Consider this scenario: two investments have similar average returns, but upon closer examination, one might have experienced significantly higher volatility, or fluctuation in value, over time compared to the other. In this context, risk-adjusted return helps investors discern which investment truly offers the best bang for their buck, taking into account the inherent risks involved.

To put it simply, risk-adjusted return allows investors to answer a crucial question: Are the returns generated by an investment commensurate with the level of risk taken to achieve them?

By incorporating risk into the equation, risk-adjusted return provides a more nuanced and comprehensive assessment of an investment's performance than simply looking at raw returns. It enables investors to gauge whether the potential rewards outweigh the potential pitfalls, helping them make more informed decisions in allocating their capital.

Furthermore, risk-adjusted return serves as a valuable tool for comparing investments across different asset classes and risk profiles. For instance, it allows investors to assess the relative performance of a high-risk, high-return investment against a more conservative, low-risk option, taking into account the differing levels of volatility and uncertainty inherent in each.

There are multiple methods to measure risk-adjusted returns, but the two most widely recognized are the Sharpe ratio and the Sortino ratio.

When it comes to investing, the common terminology says that you're investing in "the markets" or Wall Street. But what do these terms mean, and how are markets defined?

Simply put, financial markets are where traders and investors buy and sell assets. Markets can be used as a way for businesses to reduce risk and raise capital. Through markets, investors can buy into these companies in a way that hopefully makes money. The benefits of financial markets in a capitalist economy are numerous, from bringing confidence to the economy and helping to fund entrepreneurial ventures to providing liquidity to businesses.

Several types of financial markets can be invested in, including but not limited to stocks, bonds, derivatives, and commodities.

The stock market is a financial market where companies can go to raise capital to expand. Investors can buy the shares of a company—called stocks—through a broker-dealer. Stocks may be traded on listed exchanges, such as the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (Nasdaq) stock market. Indexes such as the Standard and Poor's 500 (S&P 500) Index and the Dow Jones tracks the averages of a group of companies that are publicly traded.

Mutual funds and ETFs (as well as some other types of investments) allow you to buy a bunch of stocks at once without having to pick them out individually. You may have seen mutual funds as an option for investing in your 401(k), for example.

Bonds are used when companies need to raise a large amount of money. Unlike stocks, bonds are a security in which an investor loans money for a defined period at a preestablished interest rate. Furthermore, unlike stocks, in which there is no guarantee of financial gain, bonds are more like a loan agreement. The bond market sells securities, such as notes and bills issued by the United States Treasury.

Derivatives entail a more complicated financial market. Essentially, a derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (e.g., a security) or set of assets (e.g., an index). Derivatives are secondary securities whose value is solely derived from the value of the primary security that they are linked to. In and of itself, a derivative is worthless. Rather than trading stocks directly, a derivatives market trades futures and options contracts, as well as other advanced financial products, which only have as much value as the primary security.

Commodities markets involve physical goods that are bought, sold, and traded. These are also considered alternative assets. Whereas stocks and bonds are more akin to financial contracts, commodities markets deal in physical goods. There are four main types of commodities markets: energy, metals, agricultural products, and livestock.

The previous markets covered have existed for decades. A new market that has only been around for a little over a single decade is the cryptocurrency, or digital asset, market. You may have heard of Bitcoin or Ethereum, the top two cryptocurrencies. This new market involves a variety of digital assets, from cryptocurrencies that are designed to be a replacement or alternative to traditional fiat currency, a token to represent some other asset, or a new way to interact with and transact with traditional financial markets.

Many consider crypto to be the future of the financial system as well as many other things we interact with today. Digital assets and cryptocurrencies are very new, can be purchased and transacted with in a variety of ways, and can appear to be a very complex system today. Fortunately, Strateon Intelligent Wealth is among the few financial planners and advisors that provides clients with education, guidance, advice, and even training on using cryptocurrencies and digital assets.

If you're unsure about the hidden costs of your investments, you're certainly not alone. Investment costs are rarely obvious, often buried deep in fine print or disguised behind marketing hype. Understanding these costs is essential, as every dollar spent on fees is a dollar less growing towards your financial future.

Part of Strateon Intelligent Wealth's mission is to illuminate these hidden expenses and help you keep more of your money working for you.

Investment costs primarily fall into two major categories:

• Fund Management Fees

• Custodian and Brokerage (Trading) Costs

Let’s dive deeply into each.

When you invest, you typically use mutual funds or exchange-traded funds (ETFs). These funds pool investor money to efficiently buy thousands of individual securities, saving you the hassle of managing investments individually.

The primary fee charged by funds is known as an expense ratio, an annual percentage of your invested assets. Expense ratios can range dramatically:

• Low-cost, broad-market index funds: typically around 0.05% or less (5 basis points).

• High-cost, actively managed funds: often near or above 1% (100 basis points).

Higher fees do not necessarily translate to better returns—in fact, they frequently erode your earnings over time.

Some funds charge extra fees, including:

• Front-end loads: Charged when you buy fund shares.

• Back-end loads (Redemption fees): Charged when you sell shares.

• Contingent deferred sales charges (CDSCs): Additional fees upon selling within certain periods.

Always carefully review fund prospectuses for these fees.

Fund management fees are not directly billed to you. Instead, they're subtly deducted from fund returns, making them easy to overlook—but they still reduce your overall investment performance significantly.

A revealing study, "Obfuscation in Mutual Funds" by leading academics, highlighted how fees affect returns dramatically. Two nearly identical S&P 500 index funds showed gross returns of about 31.47%. However, one fund charged just 0.02%, while another levied a staggering 5.08%. Clearly, lower-cost funds leave more money in your pocket.

Moreover, higher-cost funds often obscure their fees in complex documents, while low-cost funds usually provide transparent and easy-to-understand fee disclosures.

• Identify your goals and select relevant funds.

• Compare expense ratios among similar funds.

• Avoid funds charging loads or excessive fees.

• Favor simplicity and transparency.

Your investment accounts are held by custodians (like Schwab, Fidelity, Robinhood, or Wealthfront). Custodians execute trades through brokers—another potential source of hidden expenses.

• Robinhood was fined $65 million by the SEC for failing to disclose true trading costs linked to payment for order flow practices.

• Bank sweep accounts historically offer lower interest rates than market alternatives, quietly boosting custodian profits.

You could manage these complexities yourself, but Strateon Intelligent Wealth offers something far greater: comprehensive fiduciary financial advice and transparent fees.

• Independent and Fee-only: No hidden incentives or commissions.

• Holistic Wealth Advice: Comprehensive financial planning beyond mere investments.

• Clear, Transparent Fees: Always know exactly what you're paying.

• Tailored investment portfolios matching your goals and risk tolerance.

• Strategic use of insurance to protect your wealth.

• Retirement spending strategies, including tax-efficient withdrawal planning.

• Optimizing Social Security benefits.

• Comprehensive estate planning and beneficiary reviews.

• Business wealth integration, including corporate stock options.

• Tax-efficient charitable giving.

We align entirely with your best interests, not hidden agendas. Our approach minimizes unnecessary costs, optimizes returns, and diligently manages risks—providing measurable value far beyond mere "investment management."

When you choose Strateon Intelligent Wealth, you're selecting a partner dedicated to clarity, efficiency, and your financial well-being. Let us help illuminate and eliminate unnecessary investment costs, freeing you to achieve your most important financial goals.

Clearly, there is a lot to think about when planning for retirement. While we have a degree of control over many of the choices involved, there’s one big wild card called sequence risk.

Sequence risk is the risk that you’ll encounter negative investment returns in early retirement. This is an important consideration, because the random sequence – or order – in which you earn your returns early in retirement can have a significant impact on your lasting wealth. Simply put, a retirement portfolio that happens to experience positive returns early in retirement will outlast an identical portfolio that must endure negative returns early in retirement... even if their long-term rates of return end up the same.

Since nobody can predict which return sequence they’ll experience early in their retirement, every family should prepare for a range of possibilities in their realistic retirement planning.

It’s no secret that global stock markets are volatile. While long-term average annual returns may be in the range of 7%, markets rarely deliver this exact average any given year. Soaring one year, plummeting the next; we never know for sure how far above or below average each year will be.

During your career, you’re mostly spending earned income, while adding to your retirement reserves as aggressively as your plans call for. As long as you stay the course – benefiting from the upswings and enduring the downturns – tolerating market volatility is just part of the plan.

In fact, when you’re still accumulating wealth, market downturns give you the opportunity to buy more shares than you otherwise could when prices are higher. When the market recovers, you then have more shares to recover with, which ultimately strengthens your portfolio.

But then, you stop working, and start spending your reserves. This has an opposite effect. Now, when stock markets decline, you may need to sell shares at low prices, which means you’ll have to sell more of them to withdraw the same amount of cash. Even though the market is expected to eventually recover and continue upward, your portfolio will have fewer shares with which to participate in the recovery. This hurts your portfolio’s staying power. It won’t be able to bounce back as readily as when you were adding shares to it, or at least not taking them away.

Sequence risk should NOT change your overall approach to investing. As 2020 has clearly shown us, you never know what’s going to happen next. Crashes usually occur without warning, while some of the strongest rebounds arrive amidst the darkest days.

So, whether you’re 20, 40, 60, or 102, we still recommend building and maintaining a low-cost, globally diversified portfolio that reflects your personal goals and risk tolerances. It's still advised against trying to pick individual stocks or react to current market conditions. It's still suggested you only change your portfolio’s asset allocations if your personal goals have changed – never in raw reaction to changeable market moods.

What can you do to mitigate sequence risk if it happens to you?

If you are willing and able, you might postpone retirement, or even return to the workforce. Even part-time employment can help offset an ill-timed sequence of negative market returns. If your circumstances allow, you may be able to not only avoid spending retirement reserves during down markets, but even add more in (buying at bargain prices).

Were you planning for higher investment returns than reality has delivered? Since your portfolio is most vulnerable to negative sequence risks early in retirement, you may want to initially spend less than planned, to give your portfolio the fuel it needs to replenish itself.

When you retire, you typically have several sources of income to draw from. You may have traditional investment accounts, retirement accounts, Social Security, or pension plans. Your investments are usually divided between stocks and bonds. You may have equity in your home. You may have, or be in a position to create an annuity. You may have cash reserves. If you encounter stock market sequence risk early in retirement, you might be able to tap a combination of your non-stock assets for initial spending needs. This can mitigate the hit your portfolio will otherwise have to take if you must liquidate shares of stock.

Sequence risk is usually not the only consideration at play in retirement planning. There are taxes to consider. Estate plans to bear in mind. Carefully structured investment portfolios to maintain. Logistics to learn. All this speaks to the value an experienced advisor can add before, during, and after this pivotal time in your financial journey. Strateon Intelligent Wealth helps its clients prepare for and mitigate sequence risk within the greater context of their goals for funding, managing, spending, and bequeathing their lifetime wealth.