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Testing Investment Strategies in a Downturn
 
February 27 – March 11, 2020
 
Money

investing



Key takeaways

-Market volatility may make you question investment strategy, but it's important to consider the long-term implications of your strategy.

-Planning tools may be able to help you visualize the potential impact of different investment strategies over the long term.

When it comes to money matters, you could say people have 2 ways of thinking—the long view and the right now. Both can work in different situations. But when it comes to investing, particularly in falling markets, short-term thinking can be dangerous to your long-term financial health.

When you see the value of your investments drop, do you want to sell? It’s a normal emotional reaction to loss. But selling at market lows means locking in losses and giving up growth potential if markets rebound. Sure, it would be great if we could easily time the ups and downs of the market, but history shows that’s just not possible. On the other hand, keeping your money in cash sacrifices any potential growth that investing might achieve.

So how do you manage your emotions during market downturns? One way is to work with an investment professional who can help you test drive your investment plan by illustrating the potential trade-offs of different strategies under different market scenarios. Doing this before the market pulls back can keep you cool when it does.

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