By Brandon Miller, CFP–
Does it seem like, every time you think you have a handle on what the economy has in store, a new development throws a wrench right in the middle? Just me? I suspect it’s not just me, given the recent spate of bank drama SVB and First Republic are jarring on both main street and Wall Street. Even so, it’s important to have perspective and recognize the long-game is really the focus when growing your portfolio. Let’s focus on what we can control. So, how do you keep calm and carry on when it comes to your investments? Here are a few suggestions:
Keep things in perspective. Simply put, volatility is a given when you are investing. Everything from political uncertainty at home or in the far corners of the world to natural disasters to breakthrough discoveries can impact investor confidence. But history has shown us that market setbacks are typically followed by periods of recovery. Create a goals-based plan. Instead of chasing the next great investment or bailing out when stocks tank, develop an investing strategy that centers around what you want to achieve in life. Your goals are probably more stable than the markets, so a solid plan makes it easier to weather ups and downs. A goals-based plan also removes the temptation to try market timing, where you attempt to buy when investments are low and sell when they’re high. This is challenging, to say the least, since no one really knows where the market is headed at any given time. And it could actually end up costing you money if you get into or out of the market at the wrong time.
Diversify your investments. Investing in different types of assets helps spread out your risk. Often when one type of investment is down, another asset class may be experiencing banner growth. For example, bonds may offer an island of stability when stocks and other equities are plummeting. Using an asset allocation strategy, you can balance risk and reward by investing in different types of assets in portions that make sense for your goals, risk tolerance, and time horizon.
Invest regularly. One of the smartest ways to combat market uncertainty is to create a regular investment schedule. You can choose any interval that works for you—weekly, monthly, quarterly or per paycheck. The beauty of this strategy is that you invest during both peaks and valleys, which helps even things out. And this disciplined approach helps ensure that short-term downturns have minimal impact on your portfolio’s ultimate performance.
Review your investments often. Bob Dylan wrote that “the times they are a-changing” back in 1964, and that’s as true now as it was then. The world is ever fluid and your investments may need to change too, to reflect new realities. An annual review of your portfolio can help make sure your investments take advantage of new opportunities, while still aligning with your ultimate investment goals.
Turn to the professionals. You may have read through all of these suggestions and still not be totally comfortable making important investment decisions yourself. No worries. A financial advisor can help you sort through the myriad options and create an investment strategy that works best for you. If you are nervous about your investments, especially when the market makes a major correction and drops precipitously, you might be in the wrong ones. A financial professional can help you find assets that are a better fit for your risk tolerance. They can also make sure your investments reflect your values (a focus on environmentally
sustainable investments out of your portfolio, for example), and advance you toward your goals.
Whether you turn to professional help or invest on your own, the main thing to remember is that a solid financial plan that is based on your goals provides one of the best antidotes to the anxiety caused by a roller-coaster investment market.
The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.
Brio Financial Group is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Brio Financial Group and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Brio Financial Group unless a client service agreement is in place.
Brandon Miller, CFP®, is a financial consultant at Brio Financial Group in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals.
Money Matters
Published on May 18, 2023
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