5 Ways to Keep Your Cool in This MarketSubmitted by MIRUS Financial Partners on February 8th, 2018
Keeping your cool can be tough when the market drops and rises so quickly. That’s why it’s important, for your financial health (and your mental health), to have strategies in place that prepare you for market volatility. We’ve put together 5 tips to help you keep calm and focused on your long-term financial goals.
1. Remember the Game Plan
When you started investing, you had a goal, or many goals, in mind. Your current market allocation is based on those goals. Remembering this game plan can help prevent you from using emotion to guide your investing decisions. Your portfolio should be structured to tolerate some risk, based on your goals and your life stage. If you are not confident in your game plan, or if you’re worried that your portfolio is not balanced, seek the advice of a certified financial planner.
2. Know What You Own, and Why You Own it.
When things get stressful in the market, think back on why you originally made a specific investment. Think about whether these motivations still hold, regardless of the what the market is doing on any given day. When you understand how specific holdings in your portfolio support your financial game plan, you can look at the market more objectively, and even think about whether lower prices actually represent a buying opportunity.
However, if don't understand why a security is in your portfolio, it’s time to find out. Examination of why each part of your portfolio helps you meet your goals is important when evaluating whether to buy, sell or trade. This is a great time to talk to your certified financial planner about the details of your portfolio.
3. Learn From Your Mistakes.
We’re all geniuses during bull markets, but it often takes a bear market to make you rethink your investment strategies. If an earlier choice now seems rash, sometimes the best strategy is to take a tax loss, learn from the experience, and apply the lesson to future decisions. Even certified financial planners can’t avoid market downturns, but they can help can prepare you and your portfolio to weather the market's inevitable ups and downs in ways that helps you work toward your long-term goals.
4. Keep Cash for Peace of Mind
The swings in the stock market can be mentally stressful. Keeping an account in cash can be the financial equivalent of taking deep breaths. For many people, cash is easy to understand, easy to hold, and provides great emotional comfort. Keeping a cash account could provide a cushion that prevents you from having to sell stocks to meet ordinary expenses. Having a cash reserves, coupled with a disciplined investing strategy, can give you the breathing room you need to keep a balanced perspective on market volatility.
5. Don’t Forget Your Progress to Date
Your financial portfolio was built as a result of years of effort. It may help to take a look back and see how far you've come in building your portfolio. If your portfolio is down this year, it can be easy to forget any progress you may already have made over the years. Though past performance is no guarantee of future returns, of course, the stock market's long-term direction has historically been up. With stocks, it's important to remember that having an investing strategy is only half the battle; the other half is being able to stick to it. If patience has helped you build a nest egg, it just might be useful now, too.
Mark A. Vergenes is President of MIRUS Financial Partners, 110 E. King St., Lancaster, PA; 717-509-4521 or email@example.com Investment Advisor Representative offering securities and advisory services offered through Cetera Advisor Networks LLC., member FINRA/SIPC. Cetera is under separate ownership from any other named entity. Neither MIRUS Financial Partners nor Cetera Advisor Networks LLC. give tax or legal advice.