Recent market ups and downs have tested investors’ ability to stay disciplined to their financial plan and investment strategy. At the onset of the client relationship and each year, we monitor that plan and put strategies in place to prepare for a variety of environments, including this one. We aim to be proactive versus reactive. It is our duty and number one priority as your advisor to help you reach your long-term goals. We strive to coach you on that plan along the way, empowering you to make wise decisions.
“Investors are more likely to reach their long-term goals if they remain invested and avoid short-term decisions that may take them off course.1
What the below chart shows
As this hypothetical example shows, investors may make suboptimal decisions when emotions take over, tending to buy out of excitement when the market is going up and sell out of fear when the market is falling. Markets do ultimately normalize, and when they do, those who stay invested may benefit more than those who don’t.2
What it means for investors
To help reason prevail, first make sure you’re comfortable with your allocation to riskier assets and that it makes sense in light of your time horizon. You also need a logical framework for financial decisions and a plan that anticipates periods of market turbulence. A systematic approach for reviewing portfolio results, with pre-established guidelines for selling, may help as well." 3
If you feel there has been a life change that calls for an adjustment in your plan, please do not hesitate to reach out and make an appointment with an advisor to review. We are also happy to have conversations regarding your risk tolerance.
1. https://www.pimco.com/en-us/resources/education/the-benefits-of-staying-invested
2. https://www.pimco.com/en-us/resources/education/the-benefits-of-staying-invested
3. https://www.pimco.com/en-us/resources/education/the-benefits-of-staying-invested