Planning Ahead to Cope with Market Volatility
Barry Bigelow with Great Waters Financial in Duluth Offers Tips to Manage Your Money for the Future
DULUTH, Minn. – Ongoing market volatility is the new reality in 2018. Massive swings in both directions have occurred multiple times in the last five months leaving investors nervous and unsure about their financial plan.
Barry Bigelow with Great Waters Financial stopped by FOX 21 Local News to explain how local residents can manage this ongoing volatility and create a plan for the long-term that can help provide peace of mind and confidence in their financial future.
Don’t panic or make sudden moves:
Whether the market is taking a sudden downturn, or it’s surging to record breaking levels, it’s crucial that you don’t let emotions drive your investment decisions. Making frequent and sudden changes to your portfolio usually doesn’t bode well for most investors and many find themselves buying high and selling low – which is exactly what you don’t want to do. If you don’t already have a long-term plan in place, work with a financial professional to work out a plan that will leave you with peace of mind, regardless of market activity.
Diversify your investments:
When it comes to investing, putting all your eggs in one basket can leave you over exposed to unnecessary risk. An important component of a successful long-term financial plan, is proper diversification. If one sector takes a tumble, your entire portfolio shouldn’t tank with it. Review your portfolio and ensure that you have proper diversification and that you aren’t invested to heavily in one single sector. Having a variety of investments can help ensure that you can ride out a potential market downturn.
Consider Your time horizon:
The amount of risk you can take depends on your age and when you plan on retiring. Typically, younger investors have time on their side and can afford to have more exposure to the markets. If you’re close to or in retirement, however, you do want to have more conservative investments and reduce your risk exposure. While some conservative investments can help put a hedge on inflation, pre-retirees and retirees typically can’t afford to take a big hit from a market downturn. It can be easy getting caught up in short term goals or immediate gratification – especially when the economy is strong – but remember to prioritize your retirement and make decisions that will most benefit it in the long run.