How to Invest in a Volatile Market
January 10, 2019
In recent days, a volatile market, falling stock prices, and announcements from industry experts all seem to be pointing in the direction of a bear market. We have enjoyed almost a decade of continued market growth, following the Great Recession of 2008. Is it time for a market correction or are we sliding into another recession?
A number of factors come into play to cause volatility in the market. Currently, some of the issues causing such disruption include:
- Interest rates rising
- Federal Reserve statements
- Uncertainty regarding overseas tariffs
- China’s economy
- Midterm elections
- Technology stocks rising and falling
- Investors foreseeing a bear market and acting in accordance
While we can never perfectly forecast the future, these and other indicators seem to be pointing to a continued volatile market in 2019. If that’s the case, you may be wondering what to do with your financial investments. I have a number of recommendations to share with you.
1. Think Long Term
Historically speaking, bear markets are relatively short compared to their bull counterparts and they come in cycles. That’s why we work with our clients to create long-term financial investment strategies that stretch well beyond the momentary blips on the radar. We aren’t looking at the headlines and worrying about what’s going to happen tomorrow. We are looking five, 10, or even more years down the road.
2. Act Prudently
When you look at the long-term ups and downs of the market, investors who can ride through a recession see their investments pay off over time. I’ve been doing this long enough to see this happen time and again with clients. The ones who can put emotionally driven headlines aside and focus on their own goals, and then avoid the temptation to pull out of the market when things get bumps, are the ones who succeed. Despite all the noise we’re hearing, the market is still healthy and strong at this point.
3. Invest Strategically
While you’re working with your advisor, be honest about your risk tolerance. For some, bear markets are a time to invest in certain opportunities. For others, it’s a time to just rest and wait until things rise again. Your advisor can help you make strategic financial investment decisions that will help you feel confident in the midst of volatility while also growing toward your goals.
If you’re feeling uncertain about the market and your investments, rest assured that we’ve seen these volatile times before and we plan our investments on a longer-term scale. However, if you have specific questions or concerns, please contact me or your advisor.
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For more information about smoothly transitioning into retirement, schedule a meeting today with one of our advisors to create your financial strategy or register to attend a seminar.