As someone who has spent her career helping people steward their assets, I’m very moved by the financial uncertainties that individuals and families are facing due to the coronavirus crisis. Particularly when it comes to investments, many are concerned that their hard work, sacrifice and wise planning will be erased in the current market environment. The advice I stand by and share daily with my clients comes down to this: Long-term investment success is about maintaining long-term vision.
These three tips can help you remain financially proactive in uncertain times:
1. Stay the course and continue to participate in the stock market.
Participating in the markets’ potential for growth is important, even though markets experience periods of volatility. Stocks have typically been one of the best investments to grow assets, outpace inflation and build wealth over time. For example, according to research published earlier this year by Northern Trust Asset Management, a $10,000 stock investment in 1946 would have a value today of $23,300,000.
2. Resist major portfolio changes when markets are volatile.
Think of the instinct to make drastic changes during hard times like a driver’s tendency to overcorrect when they’re avoiding something in the road. Just like jerking a steering wheel while traveling at a high speed can be dangerous, making big changes when markets are volatile can launch you off course.
Unfortunately, this is exactly what can happen when investors let emotions influence their decisions. Missing even just a few of the best days of returns can materially impact your portfolio’s performance as history reveals that after periods of volatility, the stock market has not only recovered, but moved on to reach new highs. A well-diversified, professionally managed investment plan can help.
3. Make the most of it.
In times of market stress, it is reasonable to consider rebalancing back to your investment objective. Be guided by experts who study the markets and are trained to help clients identify their investment objective for the long term. These professionals can be found in lots of places including corporate trust companies usually positioned within banks. For decades, trust companies have steadily and successfully managed assets for a wide range of clients from novices to sophisticated entrepreneurs. Each client with whom I work has a dedicated portfolio manager. Their investment expertise is a good value with well-priced services.
Dee Davenport serves as senior vice president and trust officer of Simmons Wealth Management, where she leverages her 20 years of industry experience to assist clients with wealth cultivation, stewardship and transfer of legacies. Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Simmons Wealth Management is a marketing name used by the Trust Department of Simmons Bank. Investments and insurance products are: Not a Deposit | Not FDIC Insured | Not Insured by Any Federal Government Agency | Not Bank Guaranteed | May Lose Value.