March has proven to give us all kinds of headlines in the news. News is pouring in from every direction—TV, social media, apps—it’s easy to feel inundated. The general media is great at filling up the airwaves with fear and noise. An overload of news can certainly affect your mental health, too. Staying informed is important but so is protecting your peace of mind AND your portfolio. You need to be able to identify what is important—and what is not. In other words, what signals should you pay attention to—and what noise should you ignore?
Here are four steps I believe will empower you to make more confident and well-informed decisions moving forward.
STAY INVESTED
This graph portrays staying in the market fully invested, not selling out of your portfolio during the rough/wrong times but rather making shifts to your portfolio, if need be. This graph shows the power of compounding when your money is in play on the best days in the market. The issue is, it’s nearly impossible to predict which days will be the best days or the worst days in the market, so staying invested is the key. The power of compounding is so critical to the overall portfolio growth, it pays to stay in.
UNDERSTANDING THE MARKET IS RESILIENT
When considering the returns from the S&P 500 for the past 99 years, the S&P 500 has had a positive return for 73 calendar years and a negative return for just 26 years—a 74% winning percentage. For the years in which the S&P 500 had a positive return, the average annual rate of return is a little over 21%. For the years in which the S&P 500 lost money, the average annual rate of loss has been a little more than 13%.
BROAD DIVERSIFICATION
The recent stock-market stumble, spearheaded by Tesla and other tech giants, serves as a wake-up call that building a diversified investment portfolio should be taken seriously, and revisited often. Good financial advisors review their clients’ portfolios for potential adjustments and changes once every quarter. There are many investment options outside of traditional stocks and bonds. These investments include ETF’s, SMA’s, Private Equity or Debt, Commodities, Structured Products, and more. Diversification aims to include assets that are not highly correlated with one another so that if any one investment performs poorly, it can be offset by the better performance of another, leading to a more consistent overall portfolio return.
GET YOUR NEWS FROM YOUR FINANCIAL ADVISOR
Financial Advisors subscribe to and receive more factual and unbiased news filled with fundamental, historical and quantitative data provided by the top research analysts from sources such as Blackrock, Invesco, Goldman Sachs, Pimco, etc. With these high-quality news sources, we can better navigate volatility, empowering you to make clear, rational decisions with confidence.
No matter what you are considering, make sure it involves a Financial Advisor you trust, who can help you get to where you want to go. In my practice, we specialize in enhancing happiness in retirement. We help you design a personalized Lifestyle Wealth Plan and customize a Retire in Style Investment Strategy. Additionally, our “Did You Know” series of workshops and events serve as valuable resources, deepening your understanding of money, enabling you to build a resilient and adaptive financial strategy, and providing a holistic view of financial health. We reverse engineer your dream!
Please call me to schedule your complimentary consultation at 949-781-2100.
Wishing you all the BEST!
SOURCES:
Why a diversified investment strategy is prudent when stocks fall
The 7 Alternative Investments You Should Know | HBS Online
S&P 500’s Impressive Rate-Of-Return Score: 70-25
Stansberry Research | World-Class Financial Research
