Turbulent market conditions can make any investor nervous, but the stock market is constantly fluctuating, which is quite normal over periods of time. Any number of factors may cause its rise or fall: global issues, economic news, industry up-turns (or down-turns). So, in the ever changing financial landscape that long-term investors face, what are some things you can do to help increase the likelihood of maintaining your portfolio’s earning stability? Here’s some suggestions:

1. Keep your portfolio diversified.

Managing risk by spreading it out over different types of assets is one of the best strategies. Diversifying based on asset class and market sector are two ways to do this. It is important to note that every investment includes risk, and diversifying will not eliminate risk entirely, but it can help to cushion the blow when markets dip. Stocks, bonds, commodities, and other asset classes each play a unique role in your portfolio. Rebalance your portfolio as needed when market changes skew your allocation from its original target.

2. Assess your risk tolerance on a regular basis.

At different stages of your life, the amount of risk you can tolerate or afford to take will shift. Generally, folks are willing to take more risk investing when they are younger, and as retirement approaches, this risk tolerance will decrease. Periodically assessing your risk tolerance and adjusting your portfolio accordingly can help you to transition through various phases of life, as well as protect your nest egg as you grow older. Consider including defensive assets for more stability as time goes on.

3. Focus on the long-term perspective.

When it comes to the stock market fluctuations, avoid panic selling. Downturns happen, and bear markets are often short lived. Selling during a downturn can lock in losses. Depending on your investment goals, investing in quality companies with strong financial statements and consistent performances can add a layer of protection.

4. Tap into tax efficiency.

There are a number of tax-efficient investment strategies you can employ, and tax-loss harvesting is a good option. This allows you to offset gains with losses to minimize your tax liability by selling investments that are down in value to offset profit from other investments. There are rules and exceptions, so have your TFG Financial Advisor guide you.

Reach Out to Us: Concerned investors can ease their worry during market turbulence by understanding asset allocation, diversification, cash flow needs, and risk tolerance before making any changes to their portfolio. Talk with a TFG Financial Advisor about revisiting their financial goals or asset allocation. Every investment includes risk; an advisor can educate you about strategies to minimize risk and tax, how to set up a portfolio from a long term perspective, and what makes sense in regards to your unique situation. Call 561-209-1120 to set up an appointment today.