Your money can be affected by market swings. The best course of action is to be prepared rather than worried. Market fluctuations can be managed with strategies. When your news feed is filled with scary images about struggling markets, there are strategies you can utilize to make sure you haven’t taken on too much risk.
Volatility in the market cannot be avoided. That is the nature of healthy and normal markets. In the same way as seasons, markets go through phases of growth and decline. It is difficult to predict when these phases will occur. It’s important not to panic when the market makes dramatic moves, even if you are tempted to question your investment strategy. Historical facts indicate that when the market drops, it always comes back even stronger.
When the market declines, it’s natural to want to protect your investments, but it also raises the question of when to get back into the market. If you stay focused on your long-term investment goals, you can help reduce the media noise surrounding falling markets and prevent making rash investment decisions that don’t follow your plans.
It’s crucial to invest during a downturn by putting your money behind solid investments. Don’t buy stocks just because they are cheap. As a substitute, one should buy quality stocks that are going through a rough time. Such investments are more likely to recover from a market crash.
Risk reduction is achieved through diversification. If one of those investments gets into trouble, holding several different investments can help lower the emotional impact. It is believed that stocks offer the greatest potential for increasing in value over time. Stock markets are also more risky for a reason – they can shoot up or plummet down. Although they are a common investment in Canada, they aren’t the only asset class most people should own. It is important to diversify your portfolio since you cannot predict which asset class will perform best year over year. Investors also commonly invest in bonds, which are generally less volatile and offer fewer returns, or other assets like cash, government bonds or money market instruments, which offer very little return alongside very little volatility.
While diversification refers to the mix of different asset classes in your portfolio, you should choose an allocation that is appropriate for your own financial situation, including how old you are, what kind of returns you need and when, and how much risk you can tolerate.
Putting all your money in a high-interest savings account or investing it in startup stocks can be your asset allocation strategy. Depending on your asset allocation, you may have trouble keeping up with inflation. The ideal asset allocation is probably somewhere between the two extremes. Your financial goals can be aligned with your investments by working with an investment professional. Despite short-term changes in the market, if you have a sound investment plan, you can focus on the long-term.
How do you plan to invest your money? Good for you. Half the battle is won. Remember to review it, update it, and most importantly, keep it up to date. Properly managing a portfolio begins with determining your asset allocation. Especially when equity components outperform fixed income investments, a portfolio can become distorted over time.
All of these concerns can be handled by us, talking to an expert has immense value. Renaissance Investment Advisors team has collective experience of 50 years. With us, you will not only stay on track with your investment plan, but you will also see improvements in your investments over time.
As opposed to trying to predict what the market will do, Renaissance Investment Advisors will make sure your investments are set up to be in the best position possible if it does move.
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