Diversification, Regular Reviews for the Long Haul

The financial market is not for the faint of heart, and its downturns should come as no surprise. The market has often been characterized by wide-price swings, which can be a reflection of economic and political events. The fluctuations can feel like a roller coaster ride, and in the downturn, the gravity seems to accelerate your speed of decent. It may feel like you’re free falling.

As a shell-shocked investor, you sometimes want to bail from the market all together. You thought you were prepared for the psychological anxiety by constantly repeating to yourself, “I’m in for the long haul.” You stare at the “mountain charts” displaying the markets inclination for value appreciation. But when you’re in a steep descent, the peaks seem far away. Taking the long-term point of view can help, but it may not be enough to deliver the psychological solace you seek. (As a head’s up: market timing is generally touted online as an elite money management strategy; but few, if any, of its managers can actually deliver the performance they promise.)

When you can’t find an exit ramp off the broadway of destruction, it may be an indication you didn’t plan your road trip accordingly. Cross-country travel without planning for overnight stays, gasoline and food stops can leave you stranded in desolate places. Regular reviews on your retirement income strategies can help you make measured decisions along the way as you travel toward your destination.

Diversification of your assets is a strategy to spread your investments over asset types and time horizons among equities, bonds, cash and sometimes-alternative investments, like real estate and gold. They’re investor-suitability thresholds that need to be established with your financial consultant before purchasing any financial products for risk tolerance and goal planning.

Syndicated financial columnist and talk show host Steve Savant interviews Stephen Stricklin, certified financial planner and registered investment advisor. Stephen is one of the top five advisors in the nation according Retirement Advisor magazine, a leading industry publication.