You’ve probably heard by now that Silicon Valley Bank failed last Friday.

It appears the bank rapidly took deposits over the last few years, and they needed somewhere to place their funds. And here begins the problem. The bank put money in Treasury bonds and mortgage-backed securities. When interest rates go up, bonds lose value.

A few depositors figured this out and began withdrawing their large deposits in the bank. Eventually the bank was unable to meet the demand of withdrawals. Which is a bank’s worst nightmare!

If you’ve been following this saga, you may be reading about fears of “contagion,” which is a fancy way of saying when one bank fails there is risk that other banks may fail due to fear of similar circumstances.

Just last week, head of the Fed Jerome Powell indicated that interest rates will continue to rise in his comments to Congress. The government had appeared to think inflation was coming down, and interest rate increases might slow down. But after the economy added more jobs than expected this year, Powell began indicating that the rates are likely to continue rising. It will be interesting to see if the government pauses raising rates when they meet later this month or if the Fed will continue its plan to raise rates.

What should you do? If you have a well-thought-out plan of action, you should probably do nothing.

Nick Murray, an advisor and prolific author on the market, wrote, “Wealth is not determined by investment performance, but by investor behavior.”

The goal with financial planning is doing the planning so that you don’t have to be reactionary when difficult times happen in the market. People with no plan have to play defense all the time, but we know the only way to win is by playing offense.

You can be positioned to play offense by staying invested in difficult periods if you have a plan. Time and time again I have people tell me that if only they had not sold and had stayed invested, they’d be so much better off. Selling in difficult markets is what we do when we don’t have a plan. If you don't have a financial plan now is the time to develop it.

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