The Walton Financial Group in Barrie reinforces the timeless principles of investing
For fimacial advice about strategies to guide for investing during Volatile times , consult with a financial advisor at The Walton Financial Group in Barrie Ontario
There’s no doubt that these are unusual times. The coronavirus COVID-19 has been spreading across the globe and the markets have reacted with more volatility than usual. Last week, the Federal Reserve cut interest rates ahead of their scheduled meeting in mid-March, and some companies have revised their earnings outlooks because of concerns about their supply chains. If you’ve been reading the headlines, maybe you’re feeling spooked and wondering if you should change your investing strategy. You shouldn’t. Such volatility and uncertainty are inevitable characteristics of our markets and are not at all unprecedented historically. But it does scare investors, and unfortunately, it too often leads to big investing mistakes.
While there’s a lot of speculation, the reality is we just don’t know what’s ahead. But what we do know is that these are familiar market patterns we can learn from. So what’s our advice for worried or anxious investors? The same as always: stare down a significant market correction and stick to your plan. While investing in volatile times can sometimes challenge your discipline and commitment ,there are timeless principles to include in your investment strategy that can help ease your mind and keep you focused on the long term.
Research show markets on average recover from corrections in 121 days. Far faster than almost everyone thinks. If you invest regularly, harvest your losses, and rebalance your portfolio, you’ll end up benefiting from market corrections in multiple ways. It won’t be easy. But over the long haul, it can really pay off.
Step One . Think Diversification
Diversifying across various economies, businesses, countries and popular investment classes can help spread risk, remain more consistent and reduce the potential for underperforming assets
to impact your portfolio.
Step Two – Be rational . Nor Emotional
When markets turn negative, investors become fearful and decide to cut their losses and “sell low”.
Stay disciplined and committed to your longterm investment plan to avoid riding the emotional rollercoaster.
Step 3- Measure performance over time . Not overnight
Accept the fact that markets will rise and fall but over time markets have always moved higher.
Taking a long?term perspective can help you stay the course when markets move from crisis to opportunity and back again.
Step 4 – Turn Market volatility to your advantage
By investing a fixed dollar amount in regular intervals dollar?cost averaging can help you buy more units of an investment at lower prices, and fewer at higher prices.
This helps take the worry out of making a single lump sum investment at the wrong time.
Please Keep In Mind :
Markets have experienced surges in volatility in the past and have recovered afterwards.
-Volatility is a normal part of long?term investing. Over the long?term, taking equity risk isgenerally rewarded.
– These events should also be taken as an opportunity to have a conversation with your financial advisor to ensure that your investments are in line with your risk profile.
In Summary :
– Volatility is a normal part of long?term investing
– Long?term investors are usually rewarded for taking equity risk
– Market corrections can create attractive opportunities
– Avoid stopping and starting investments
– The benefits of regular investing tend to stack up
–Diversification of investments helps to smooth returns
– A focus on income increases total returns
– Investing in quality stocks delivers in the long run
– Don’t be swayed by emotional sentiment
– Active investment can offer benefits in periods of increased volatility
Finally – remember you are not alone . The team of experienced financial advisors at The Walton Financial Group is ready to meet with investors to help guide you in volatile times .
