Are You More Prepared for a Down Market Than You Think?
3 Reasons why you might already be prepared to navigate this.
By: Edward Jones
Whether you feel you've prepared for a down market from an emotional perspective, you may have already prepared from a financial perspective. During periods of market volatility, it's important to remember that when you work with an Edward Jones financial advisor, we recommend: you develop a strategy based on your goals and comfort with risk; you establish a diversified portfolio, designed with a purpose; and you have someone to help guide you through this.
You develop a strategy based on your goals and comfort with risk.
When we develop a financial strategy, it begins with what you are trying to accomplish. We consider your goals, income needs and comfort with risk to tailor a strategy specific to you. As part of this process, we select a portfolio objective and an asset allocation (your mix of stocks and bonds) based on both the expected return and expected risk that we believe are necessary to help reach your goals. It is also based on your comfort with risk, as a strategy is only as good as your ability to stick to it in both good and bad times.
You establish a portfolio, designed with a purpose.
As we tailor a portfolio, we know that investments don't all behave the same way at the same time. And, importantly, each investment within your portfolio serves a valuable purpose.
During a downturn, your emotions may tell you to make changes and potentially sell stocks, but stocks are there to provide for growth and ultimately help provide for your income in retirement. So if you are depending on your portfolio for your income needs today, your current income needs should be addressed by your cash and short-term fixed income in your portfolio, which can also provide time for the stocks in your portfolio to recover.
You have someone to help guide you through this.
While we cannot control the markets or the current environment, you can control something much more important for your long-term success – your emotions. So, before you consider making changes in a down market – talk to your financial advisor. Together you can review where you are today, if you remain on track toward reaching your goals, or if any adjustments need to be made.
Edward Jones - Mae Luchetti