With the shock of the most recent market volatility, it is easy to make decisions based on emotions, or panic and pull out of your investments.
But, it’s important to keep in mind that market fluctuations are natural and they’re cyclical.
“Most investors can’t simply handle the volatility with a “Set-it and Forget it” asset allocation portfolio. We believe that investors need to stay fully invested over a market cycle as it is nearly impossible to market time,” said Alex Oxenham of Hilton Capital Management. “It’s important to allow your wealth to compound over time to achieve those goals but unfortunately market volatility causes most individual investors to make poor decisions.”
Hilton Capital Management is a privately held investment management boutique based in Garden City, NY. Here are some of their suggestions for getting through a nerve-racking economic climate.
Don’t make decisions based on emotions
Making decisions based on emotions is a dangerous thing to do while investing. You’ve worked long and hard for your money, so you might be too attached.
Having a professional help you manage your money can be a great way to take emotions out the equation because they will have a much more detached and local way of thinking about your financial future.
When you have all of your eggs in one basket, it can be easy to lose everything in the blink of an eye.
It is important to diversify your investments. You might want to add a few counter-cyclical stocks (meaning those companies, like dollar stores, who typically perform well in recessions) and/or some income-generating ones. Your professional can help you.
Make personal finance choices that are responsible
Don’t just focus on your portfolio during rocky economic climates. It is important for you to also make choices in your personal life that will keep you financially stable during any economic climate.
Having solid savings, staying on top of your credit, and not overextending yourself are all ways to keep yourself solvent while your portfolio may be taking a hit.
Staying economically viable in the workplace is very important as well. You need to keep advancing in your skill set to make sure you do not get phased out of your industry.
Never underestimate the power of experience
Working with professionals is always a great way to navigate through economic climates. As the market continues to drastically shift, it is important to remember that there are professional resources out there that will help you make the most out of any economic situation.
As long as you are willing to be creative with your financial situation and work with an experienced financial advisor, you can make it through even the longest and toughest recession.