Long-term investing goals and financial plans will help you avoid impulsive moves.
Once again, we are seeing a lot of volatility in the market. Times like these indicate your tolerance for volatility. Unfortunately, further market volatility is inevitable. So to protect your portfolio during these unsettling times, it is critical to invest your assets in a way that you can truly handle for the long haul. Are you asset allocated? Are you diversified? Is your total portfolio in the efficient frontier to maximize your return and minimize your risk? A financial professional can answer these questions.
Though the recent downturns are very emotionally painful, they do serve as a meter for your tolerance for risk. You can look at the current market volatility as a stress test while keeping in mind the behavioral phenomenon known as regency bias. This bias is the tendency of investors to weigh recent events more heavily than those in the past. We don’t blame you. The market mayhem of 2008 and 2009 was not too long ago.
Focusing on Financial Planning
It is extremely difficult to focus on your long term goals during periods of uncertainty. A financial plan will keep you focused on the big picture. Systematic investing, asset allocation, and diversification are time-test strategies proven to work in your favor over the long term. Instead of looking at months and years, we need to focus on decades. After all, Rome was not build in one day. A secure financial future takes a a lifetime to achieve. There are no magic bullets. Time, saving, investing and risk management are the tools to get you there.
Check out a sample retirement planning analysis.
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