When things don’t go your way – and especially when market volatility sends your portfolio value downward – it’s natural to want to react. By not taking knee-jerk action, however, you are actually doing something very wise. Proper planning and patiently adhering to that plan are vital to long-term safety and weathering turbulent times.
Many of you have mentioned that this year’s downturn feels different than others. With the current level of national debt, inflation’s steady incline and geo-political tensions causing uncertainty, a certain amount of fear is normal. However, we have anticipated that these sorts of things will occur, and therefore, they are already factored into clients’ portfolios.
At Wymer Brownlee Wealth Strategies, we use Modern Portfolio Theory (MPT) as the basis for our investment philosophy. MPT is a method of selecting investments to maximize your overall returns with an acceptable level of risk by spreading funds across various asset classes and investments. We tailor this approach to everyone’s personal risk tolerance, and we view investments as merely one component of a larger, holistic financial plan.
Diversification is Key
The MPT model has a number of benefits for investors. In preparation for market volatility, we select diverse assets that have the potential for greater returns without a higher level of risk. It’s important to note that this framework must be adapted during times of market volatility with the overarching goal to not view your assets in isolation but holistically. Holding different asset types and investments with varied risks can help you feel secure even during turbulent times. Essentially, you aren’t putting all your eggs in one basket—or even similar baskets near a table’s edge.
Annuities Enter the Chat
Whether you’re saving for or nearing retirement, investments like stocks and bonds are most likely included in your investment strategy. But as you know, stocks go up and down, and it’s understandable that retirees, in particular, are sensitive to market fluctuations because they now live on a fixed budget. One strategy to boost confidence in turbulent times is to rely on annuities. Annuities have commonly been used to combat market volatility because they are a long-term contract between you and an insurance company, and they are often used for retirement planning.
We leverage annuities to provide retirees reliable income streams and to help investors feel financially secure when they no longer receive a monthly paycheck.
The Only Constant in Life is Change
Stock market performance isn’t the only thing you can expect to change over the course of implementing a financial plan. Your financial plan should be dynamic—adapting to your long-term goals and circumstances as life changes. Maybe you’re in a new tax bracket, recently divorced, decided to start a family or received an inheritance. These examples have greater impact on your financial strategy than the week-by-week market fluctuations we planned for in your investment portfolio. Be sure to communicate with your wealth advisor as they occur, and remember, we’re never more than a phone call away if you want to take a second look at your safety nets.
Blog by Andrew Barnes, Wealth Advisor
Category: Financial Service Team