Managing through downturn

Hurricanes, political volatility, conflict a world away, the price of oil plunges; one crisis after another around the globe has many investors on edge. We are living in unpredictable times; as any number of situations around the world, or right here at home can affect your investments, your wealth.

The market can rise and fall in a matter of moments, making the average investor very uneasy. The market is full of surprises. No one can predict when it will soar or take a dive on any given day. Even the savviest investors know they cannot readily predict when to pull their money at the first sign of trouble, as there are too many variables at play. So what do you do when a downturn is forecasted? How do you protect your hard earned money? How do you ensure that your investments are safe?

Many investors have a natural instinct to pull their money out at the dire predictions of a market downturn and resolve to put it back in again once things settle down. However, this is a very risky game, and if the timing is not right, an investor may see prices rise instead of fall and will inevitably end up buying back at a higher price.

Some investors opt to diversify their investments, to lessen the impact, in what is known as ‘asset allocation,’ essentially, spreading their money around into various asset classes, such as cash and equivalents, fixed income and equities.  However, this strategy will require the investor to know exactly how much they are potentially willing to lose and will have to ensure their portfolio reflects that possibility.

One of the hardest but most effective strategies to deal with in a downturn is to stay calm and ride it out. It isn’t easy for an investor to see their investments take a hit, however, it pays off in the long run to just sit back and do nothing and wait for the recovery.  As history shows the markets tend to rebound, it may take some time, but it should get there.

Which strategy is right for you? At Stalker Financial Group we are here to help you make the right decision for you and your family. Connect with us to develop your wealth strategy.

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