Investment Strategies for a Volatile Universe

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Sat Feb 03 2024

Volatile Universe

The universe comes with some challenges for even the most fearless space explorer. If you’re planning your strategy to invest your valuable space capital in a volatile environment, it’s helpful to have a checklist before you blast off into the unknown. Once alarms start to indicate that the journey through the market is getting a little bumpy, buckle up and secure your helmet using one of these investment strategies to see you through.

Diversify Your Investments: The Training Before the Mission

One of the best steps that you can take to protect yourself from a financial disaster is to keep your investments mission-bound on a number of paths through the cosmos. Look for opportunities to invest in a range of asset classes. If the market impacts stocks, you can fall back on your other investments, such as real estate or bonds, to see you through. If real estate values go down, your stocks and bonds are still there to tether you to your financial plan. Just like every astronaut trains for a mission with multiple contingency plans in place, having a backup can mean the difference between safely navigating an asteroid field and floating off into the vast reaches of space.

This strategy is best done before you even encounter a volatile environment. Look at investing in a variety of things, including stocks, bonds, index funds, real estate, cash, precious metals, and others. Also, consider taking your investments global to unlock even more mission potential. Diversifying is a solid part of your investment strategy in any market. Once things do start to go sideways, it’s a good opportunity to look at what types of assets are impacted and what types are not. You can use this information to inform your decisions as you continue your financial mission.

Rebalance Your Portfolio: Mid-Mission Information Gathering

Do you have more investments in stocks than you’d like? What about assets like real estate? You may be tempted to make drastic course adjustments to your space trajectory when the universe is out of whack, but take the time to really look at your portfolio first. Make a list of all of your investments and determine the percentage of each. Is it balanced in the way that you’d like? If not, this might be an opportunity to make some changes to rebalance your portfolio.

This is also a good time to dig deeper into the history of your investments. Have they historically performed well, even under pressure? Make sure that when you’re rebalancing, you look at the long-term performance and not just the past quarter or two. In a volatile universe, consistency will get the mission done. The best course of action when facing any problem in the financial universe is to get the right information before making a decision. Only then can you venture into the cosmos without hesitation.

Reassess Your Risk: Calling Back to Houston for Help

Just like any space crew has mission control, helping them navigate through obstacles and challenges, you can also benefit from the assistance of a financial planner to determine the right risk level and approach to meet your financial goals. 

If the vast openness of space makes you feel nervous, consider adjusting your risk profile. Are you comfortable taking risks with your investments for the potential of higher returns? Or do you need the security of an extra oxygen tank or two to feel like your mission is destined for success? It is a good idea to periodically review your investments and consider the risk profile relative to your goals, but it is essential when the market starts to look dicey.

Generally, lower-risk portfolios are good for situations where you rely on stable, consistent returns. Higher risk works for those who can respond to more ups and downs. Risk is something to think about and adjust constantly in a volatile universe. Just be sure not to course-correct too much during a shift in the market. Timing the market is not only very difficult to predict, but it can also leave you out exploring space without a tether to your ship's security. 

Stay the Course: A Plan for Mission Success

Sometimes, the best action to take in a volatile environment is no action. When investment returns fluctuate, keeping your ship on course through the twists and turns might be the best option. This helps you avoid rash decisions and adjustments that can worsen the problem. Like with any investment strategy, it’s important to gather information to make a sound decision. Don’t let your emotions match the market's volatility, which may lead you down a path into a black hole. With the right planning before, during, and after the financial universe becomes volatile, you can weather anything the cosmos throws while staying on track.