By Suzanne Hazlett, MBA, CIMA®, CFP®
Legendary investor Warren Buffett doesn’t try to guess how current events will play out in the market. “I don’t think I can make money by predicting what’s going to go on next week or next month,” he said. “I do think I can make money by predicting what will go on in the next ten years.”
When the state of the financial markets is keeping you up at night, here are four things you can do:
LONG-TERM vs. SHORT-TERM
If your investments are for long-term purposes, remind yourself time is on your side. If you have invested in a long-term strategy with funds needed for current expenses, you may need to sell at least enough of those investments to meet your immediate cash needs.
RISK APPETITE
It is prudent to reassess your tolerance for the market’s roller-coaster nature periodically. Many advisors use risk assessment tools. They can help clarify the risk associated with your performance aspirations, which can inform suitable investment decisions.
BALANCING ACT + TAX LOSS HARVESTING
Rebalancing is a tactic used by professionals on an ongoing basis. When financial markets shift, they can impact the balance of different types of assets within a portfolio. Selling some assets and reinvesting those dollars in others is a clever tactic when your investments get too heavily weighted in one area and underweighted in another. When making these changes in taxable accounts, selling securities showing losses allows an investor to “harvest” those losses so they may be used to offset gains and income and potentially reduce your tax bill.
DOLLAR-COST AVERAGING
If you are working at building your nest egg, a down market can be advantageous. Continuing incremental investing allows you to invest over time when values are low, positioning you to benefit when values increase, thereby averaging your investment costs and volatility exposure.
A down market can present opportunities and provide valuable reminders. Take a breath. Assess your plan. If you find yourself off course and your investments are not in alignment with your intended strategy, you can get back on track by taking these four steps.
Suzanne Hazlett, MBA, CIMA®, CFP®, is a Certified Investment Management Analyst® and CERTIFIED FINANCIAL PLANNER Professional. HAZLETT WEALTH MANAGEMENT, LLC is independent of Raymond James and is not a registered broker/dealer. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. 675 Sun Valley Road, Ketchum, Idaho, 208.726.0605. HazlettWealthManagement.com
