Broker Check
Ride Out Volatility and Avoid Emotional Investing

Ride Out Volatility and Avoid Emotional Investing

| March 21, 2022

Our View on Volatility

Stock returns can – and do – vary wildly from one year to the next, making it easy for the average investor to feel uneasy. Rest assured, the Legend Group has been closely following the current market volatility, monitoring how these uncertain times are affecting the economy with a level head and using our collective experience and knowledge to guide us.

We truly believe the best course of action is not to panic or overreact to short-term volatility. We will continue to manage your investments with your best interests and personal goals as our compass.

There are a few options you may want to consider during this time to help you stay on course with your long-term investment goals:

  • Don't Stop Contributing:

Continuing to contribute to an employer-sponsored retirement plan, other investment accounts, or making Roth IRA contributions can help you take advantage of the low prices. 

  • Utilize Low-Interest Rates:

Refinancing your current mortgage and other debts right now with our historic low-interest rates may be advantageous for you.

  • Rebalance Your Portfolio:

This could be an opportunity to take advantage of the low cost of equities and rebalance without overextending your risk. Talk with us to evaluate your investments.

  • Evaluate Your Distributions:

You may be spending less right now and could benefit from suspending or reducing your distributions from your investment or retirement accounts to just cover your expenses. Or, you may decide to start taking Social Security or other guaranteed income options sooner than planned. Speak with us about what would be helpful in your situation.

We understand that not all of these ideas will apply to everyone, but we are happy to discuss strategies that will best serve your needs. We will continue to work together to plan the best strategies for you and your family.


Avoid Emotional Investing

Any significant decision in life will bring with it an emotional component. This can be especially true when making financial decisions. When we let our emotions take control of our investment choices, we could end up making some less-than-ideal financial decisions. Short-term market volatility reactions can derail us from our long-term investment goals. Market volatility is common and can often be viewed as a financial opportunity rather than a threat. 

Just as there are plenty of ways to mitigate risk in your investments, you can also take steps to mitigate your emotional reactions.

Here are some tips on how to avoid emotional investing:

  • Set Attainable Goals:

Before you start investing, it’s crucial to take time to think about what your long-term goals are. Your goals will then be your focal point to measure, rather than getting caught up in the short-term bumps in the road.

  • Diversify Your Portfolio:

A strategically invested portfolio meets your risk tolerance, growth goals, and tax efficiency needs. Having a well-planned and diversified portfolio can naturally lessen your inclination towards tinkering around with it.

  • Adjust Your Perspective:

An emotional investor could become hyper-focused on loss aversion during times of volatility, which could cause them to make extreme decisions out of fear. This emotional approach of trying not to lose instead of staying the course could impact the outcome of your long-term goals.

  • Team Up with Professionals:

Utilizing an experienced financial team focused on your financial goals can help reduce your worry during times of volatility. You can take comfort in knowing a team of professionals is monitoring your investments but can also be a sounding board to discuss your concerns as they arise instead of making rash decisions.


Bottom Line

If you’d like to set up a consultation with your advisor, simply reach out to us. Remember that we are here for you, and we are happy to discuss the options available to you in further detail and answer any additional questions or concerns.

The Legend Group has over 50 years of experience and offers a variety of products and services designed to help meet the unique needs of our clients. Our team is here to help you with your financial needs. Our range of services and experienced advisors are dedicated to help you reach your financial goals and attain your desired future.

Contact us today to learn more about our dedicated and personal approach.