By Shad Lamm, CRPC®
Investing can be fun. Putting together a financial plan to reach your goals, watching your portfolio compound and grow over time, and thinking about the security it’ll bring in the future. It’s exciting to think about. That is, until the market starts moving in the wrong direction. Things can shift from exciting to nerve-wracking in an instant. And the worst part is, market volatility is unavoidable. It’s not a matter of “if,” it’s a matter of “when.” So the next time your portfolio takes a hit, here are some things to remember.
Imagine checking your online statement today and realizing you lost half the value of your portfolio. How would you feel? If you’re like any normal human being, you’d feel panic-stricken. However, there is a simple solution: shift from a short-term to a long-term mindset. Think of the big picture. Historically speaking, every economic downturn in the U.S. has been followed by recovery and growth. Instead of obsessing over the momentary dip in the market over the past year, take a long-term point of view. You haven’t lost anything until you decide to sell.
Assess Your Plan
When entering a period of market volatility, it’s a good idea to reassess your plan. Is it based on sound investment principles? Are you properly diversified? Is your investment style matched with your risk tolerance? Everybody’s risk tolerance is different. There is no right or wrong level of tolerance. If you feel uncomfortable seeing the value of your portfolio bouncing all over the place, it may be a good idea to switch to a more risk-averse investment strategy.
Don’t Time The Market
In times of increased market fluctuations, you might also feel tempted to predict when it will rise and fall. In theory, it seems like a great idea; in practice, not so much. It’s easier said than done. Research studies show that those who buy and sell based on their market predictions perform worse than if they would have simply held onto those investments.
Take Advantage Of Opportunities
I mentioned timing the market isn’t a good idea, but that doesn’t mean you shouldn’t take advantage of low prices. Market crashes are like the Black Friday of the stock market—everything goes on sale. So if you find a company with a long history of consistent earnings, you might want to take advantage and buy before the sale ends.
Seek Professional Guidance
Your portfolio represents your security. You will be relying on it to survive when you retire. With so much at stake, it’s important to do everything in your power to make sure it’s there for you when you need it. One of the best ways to do this is by working with a professional financial advisor. This way you can rest assured knowing you have an expert in your corner—someone to help you navigate your investment ship through rough waters. If you’d like to learn more about how Cypress Wealth Services can help you design a financial plan to withstand market volatility, call our office today at 866.888.6563.
About Cypress Wealth Services
Cypress Wealth Services (CWS) is an independent Registered Investment Advisory (RIA) firm that provides proactive financial advice and investment management for high net worth families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience, qualifications and is uniquely qualified to serve a broad range of client needs. CWS’s experience and expertise have been the foundation for their proactive client service process and client Standard of Care. CWS’s multi-generational approach focuses on efficiently protecting and growing wealth while providing proactive financial advice as a client moves through each new stage of life. With offices in Palm Desert, CA, and Anchorage, AK, the firm serves clients across the country. For more information, visit www.CypressWS.com or call 760.834.7250.