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Investment Advice Before Turbulent Times

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It is human nature to seek advice only when things aren’t going as planned or when some unforeseen situation arises. Take one’s health for example- some people routinely have an annual exam, while others seek medical advice only when they suspect a health problem and the symptoms have become severe. Just like seeking medical advice only when something is wrong, some seek financial advice from a professional only when the stock market and their investments are experiencing turbulent times.

Being reactive during turbulent stock market periods sometimes leads people to consider leaving their current financial advisor to one that wants to change their entire portfolio composition during a market downturn. Moving investments over to a new advisor during a bad time can be a bad decision when investors fail to consider the possible longer-term consequences of liquidating portfolio holdings at a low valuation and then repurchasing new shares. Advisors that are ready to move a client’s assets during their lowest valuation are not working in the client’s best interest and may be working for the commissions created through the client’s panic.

Here are few things to consider before the turbulent period arrives:

  • Market swings are a sign of a healthy market that is working toward a market correction.
  • Don’t make sudden decisions to quit investing or ‘go all in’ and keep investing through dollar cost averaging over the turbulent times the stock market may be experiencing.
  • Your investment’s time horizon is likely over many years (20 or more years) and not affected by a drop over a short period. Consider how long your 401(k) will be in the accumulation stage; it has experienced many market swings.
  • Short term investments should be moved into cash and not the stock market if you think you will need it in the next one to two years.
  • Evaluate your advisor’s performance during the good and bad times the stock market is performing. If there are issues that can’t be resolved, the best time to change advisors (and your portfolio) is when market valuations, and your portfolio’s valuation, is positive.

If you have concerns about your portfolio and how it will fare when the stock market corrects itself again, now is an excellent time to meet with us to develop a plan for the future. The best time for making financial decisions is during ‘the good times,’ not the turbulent times when an investor may be prone to emotions hindering good decisions.

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© 2024 Trajan® Wealth LLC. Nothing in this blog is intended as investment advice, nor is it an offer to buy or sell any security. Please consult your financial advisor for questions about your personal financial situation. All investments involve risk, including the potential for loss. Trajan Wealth clients and employees may have a position in any of the securities mentioned. Portfolio holdings and other data are subject to change at any time and without notice. Additionally, the above links provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Trajan Wealth, L.L.C., of any of the products, services or opinions of the corporation or organization or individual. Trajan Wealth, L.L.C., bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. These materials are for informational and educational purposes and are not designed, nor intended, to apply to any person’s individual circumstances. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. Please consult with your legal and/or tax advisor before making any tax-related decisions.

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