Watching Russia’s invasion of Ukraine is a reminder of just how unpredictable the world can be — making us fearful for our own future and the future of the global economy.
But while these world events are out of our control, how we react and respond to them is entirely up to us.
Market volatility is nothing new and there have been many ups and downs over the years — September 11, 2001, the financial crisis of 2008 and, most recently, the COVID-19 pandemic.
Financial markets are not static.
How to survive the storm
There will be volatility — and possibly a market correction — but, historically, markets have always been able to adapt and adjust to world events.
So, what should you do to weather this current financial storm?
If you’re a client of Bick Advisors, your investment portfolio is already designed to survive these market fluctuations.
World events (politically, economically, socially and environmentally) have a profound impact on the market, causing it to rise and fall like a ship on stormy seas — as does inflation, rising interest rates, overpriced stocks and various asset classes with no earnings or fundamental value.
But here’s the good news… they are also highly adaptable.
A custom-designed portfolio
At Bick Advisors, your portfolio is designed based on factors such as your goals and risk tolerance — but they’re also designed to keep your investments insulated from the unpredictability of life.
- Diversification — Having a diversified portfolio means you don’t have your entire nest egg on a single ship, you have several ships. You own investments in different industries, different countries and in individual companies. So, if one ship goes down or is heavily damaged, the remaining fleet will continue to forge ahead and find new opportunities.
- Professional management — When you invest with a financial advisor, you have access to an entire team of professionals. They’re constantly monitoring all investment classes and how they’re being affected by world events. They are aware of the current situation in Ukraine and will make any adjustments to your portfolio that are needed.
- The “Cash Wedge” Strategy — A cash wedge is the portion of your portfolio that consists of assets like bonds and other less volatile investments which are more liquid. This money isn’t invested in equity markets and is largely unaffected by volatile events, giving your investments time to recover and resume growing… like a life raft you can hang onto until the seas calm down.
- Regular Investing — Adding money each year, or with a monthly pre-authorized plan, helps you take advantage of market volatility by buying more shares when the markets are down. This allows you to grow your portfolio, even when markets are volatile.
Investment is meant to be a long-term strategy and is not to be confused with day-trading, which is itself highly volatile and carries a higher burden of risk.
Resilience, patience and the determination to stick to your plan are what will give you the best chance for financial stability.
You can’t control world events, but you can shield your savings from them by making wise investment decisions. If you have any questions or concerns, get in touch with us or contact your financial advisor.