Broker Check

Three Investing Mantras in 2018

| February 01, 2018
Share |

Every new year starts with fresh anticipation. What is possible this year? Where will we travel? What will we learn and where will we be in one year?

We also ask many of the same questions about our finances, including what is next for our ‘stock market’ investments?

Solid economic growth in the US and in many parts of the world led equity markets to a strong performance in 2017. Early in the year, optimism around the new business-friendly administration was given much of the credit for the rise in markets. As the year wore on, there was an acknowledgement that the economy as a whole was on a solid foundation: unemployment, inflation, interest rates remained low while wages, consumer confidence, and corporate profitability improved.

While the results of 2017 were rewarding, last year’s performance was certainly an outlier. As a new year starts, and despite a seemingly healthy economy, we cannot expect a similar performance in 2018. The question many people are asking is: after a year of great returns, what adjustments should I make to my investments? Our response to that question leads us back to three investing mantras that we want investors to keep in mind regardless of which direction the markets may lead us next:

  1. Invest for your goals: Invest based on a purpose - not for where you ‘think’ the market is going next. Your purpose may be college funding in 7 years or retirement in 20. When our goals change we need to review our investment strategy. If you own a broadly allocated portfolio that is invested consistent with your risk tolerance, stay true to that strategy and your purpose.
  2. Don’t be surprised: Every so often, markets decline temporarily. We can’t be surprised when it happens and we must remember that it will be temporary.
  3. Beware of the Financial Media: We are already seeing the attention-grabbing, fear-inducing, must-worry headlines in the financial media warning of some problem/issue/decline in the new year. Remember that the financial media’s goal is to attract your attention and sell advertising not to coach families on how to reach their financial goals. And if you aren’t sure you believe that 2017 started with similar doomsday articles which could not have been more wrong over the past 12 months.

As we reach out to clients in the new year, we will be asking questions about your investing goals and whether we should consider changes in strategy based on your financial picture. If you have questions or want to discuss these topics sooner, please reach out to our team.

Happy New Year!

Share |