Market changes can be stressful for investors. When the market gets chaotic, here is some guidance on staying calm and making rational decisions.
Think Long Term
It’s a rare individual who can stay calm and not panic when the value of an investment portfolio takes a sudden nosedive. Before you make any changes, however, consider all the time and thought that went into choosing your investments and asset allocation. Remember that you’re investing for the long term. Unless there are solid reasons not to, sticking with your original investment strategy may be the best plan for getting you through the turmoil.
Revisit Your Risk Tolerance
Maybe you’re taking more risk with your investments than you can comfortably tolerate. When the markets are doing well, having a large percent of your portfolio invested in stocks may seem like the best way to build your nest egg; however, if you lose sleep when the markets are rocky, you may want to take another look at your ability to accept risk and adjust your asset mix accordingly.
Keep Your Balance
Perhaps the single best defense against investment loss is the long-established strategy of diversification. To diversify your investment account, spread your assets among several investment options. It’s important to choose a mix of asset types — stocks, bonds, and money market investments — that will help you reach your particular goals.
Believe in Yourself
Your personal investment goals and the strategies you use to reach them are yours and yours alone. Remind yourself of that when the “crowd” is doing something else and you’re tempted to follow along. After you and your COUNTRY® Financial representative have decided on a strategy that fits your individual circumstances and objectives, don’t hop on the bandwagon just because your coworker, neighbor, or brother-in-law is doing something different. Talking to your financial representative before you make changes can help keep your emotions in check.
Market Timing — Out To Getcha?
Recognizing market peaks and valleys is simple once they’re over with. Highs and lows are a lot harder to determine while they are happening. You might think a stock is poised for a meteoric rise, only to watch it crash and burn in a market slide soon after you buy it; or, you might sell a tanking “loser” — and then watch it rebound soon after.
This is a hypothetical investment that performed similarly to the S&P 500 Index, an unmanaged index of 500 large-cap stocks. Past performance does not guarantee future results. You cannot invest directly in an index. Your investment returns will be different. Source: Newkirk Publications, Inc. and Mellon Analytical Solutions, LLC.
Seize the Moment
A market correction or downturn may offer an unparalleled opportunity to buy stocks at bargain prices. Consider taking advantage of the situation to fill in any gaps in your portfolio or to buy shares in companies you like but have avoided because their stock prices were too high. While there are no guarantees, historically, the market has always recovered its losses over time. When the economy and the market rebound, you’ll be in an excellent position to profit from your bargain investments.
Count on COUNTRY Financial®
Whatever your investment situation, COUNTRY Financial can help you address the financial markets. Your COUNTRY Financial representative is backed by a team of experts who follow the markets and invest the money of our clients. Contact your financial representative today to talk about your goals.
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