When it comes to your important financial goals, such as retirement, it can be unnerving to see the value of your investments rise and fall. What can you do to prepare yourself for times like this? We have a few suggestions that may help you.
Build a Diversified Portfolio
When one type of investment is down, another might be up. Building a diversified portfolio is a great way to help mitigate investment risk. Diversification is a process of spreading your money across different asset classes, such as stocks, bonds, and cash equivalents. Further diversifying your portfolio by maintaining a mix of investments can potentially provide you with the stability you need in order to handle periods of market volatility. While diversification does not ensure a profit and may not protect against loss, it can play a key role in establishing a sound investment strategy and reducing risk.
Understand Your Risk Profile
When working with new clients, we like to know how they felt and how they reacted during volatile times. Everyone loves rising markets. It’s during the difficult markets that we can learn a lot about an investor’s true risk profile. We are here to provide you personalized guidance throughout this important investment process.
Maintain a Long-Term Focus
Over the course of pursuing your long-term goals, the market will certainly have its share of ups and downs. History has shown that volatility tends to fade over time and markets recover. Amid all of the negative headlines and downbeat economic forecasts, it’s easy to panic – don’t. Stay calm, maintain your long-term perspective, and do your best to keep your emotions out of financial decisions.
Don’t Try to Time the Market
There’s an old saying that successful investing comes from time in the market, not market timing. Many experts will also agree that determining the “best” time to get in or out of the market can be nearly impossible. During the accumulation phase of our clients’ investment life, we often deploy a process called dollar-cost averaging, which invests equal or fixed amounts of money at regularly scheduled intervals. While dollar-cost averaging does not ensure a profit or protect against loss, it can help investors avoid making bad decisions, such as the natural tendency to stop investing in a weak market.
Take Advantage of Buying Opportunities
A down market doesn’t necessarily have to be a bad thing. During a down market, many savvy investors take advantage of lower prices on stock by buying more. There are thousands of strong, successful companies, which have potential for future gains, available to investors.
Work With a Financial Advisor
What we experienced in years like 1997, 2000, 2001, 2008, 2009, and 2020 are exactly why we love being financial advisors! We are our clients’ “financial first responders,” and it is a role we are privileged to serve. We focus on what matters to our clients. Living through uncertain market conditions can be overwhelming. You don’t have to go it alone. Contact Kim, Korey, or Tyler at Kletschke Wealth Management Group and let us show you how we can help! Kletschke Wealth Management Group
700 4th Street, Suite 100
Sioux City, Iowa 51101
(712) 252-6931[email protected]