Sara Walker, Vice President of Investments

Financial headlines blare from more sources than ever these days. Whether you get your news from an old transistor radio or TikTok, it’s easy to feel overwhelmed by all the opinions about the economy and the capital markets. 

This information overload can cause what I call “paralysis by analysis” –getting stuck in research until you’re too exhausted to act. Similarly, it’s just as easy to avoid dealing with finances altogether. Before you know it, the goal of managing your money gets put on the shelf for yet another week or year. While completely understandable, neither path is a good investment strategy.

What is a good investment strategy in volatile times?

A forty-plus-year career in investment management has taught me that the best answer to that question is: “It depends.” But don’t worry—I’ll explain what that means for you—our treasured member! Your financial well-being is our priority, and here are a few ideas to consider.

1. Start With Self-Awareness

My first suggestion is something you don’t always see in an investment guide—but it should be. It’s all about knowing yourself. Think of it like gathering personal data about how you react to different financial situations. This helps you build your own investment approach.

For example, imagine a 20% drop in the value of your investments. While not enjoyable for anyone, if such a drop puts you in a panic and you lose sleep at the thought, that’s a sign. You may want to keep some of your portfolio in a stable investment. One way to do that is money market mutual funds, which at the time of printing yield over 4%. 

If the thought of a 20% drop in value gives you a level of excitement similar to finding a bargain in the clearance aisle, that tells you something, too! You may be more comfortable with long-term, growth-oriented investments such as stock mutual funds or exchange-traded funds.

2. Match Your Investments to Your Needs

If you’ll need to use part of your portfolio soon—for a down payment on a home, living expenses during retirement, or required minimum distribution schedules—avoid putting that money at risk in the stock market.

The most significant damage to an investment portfolio is forced selling in a down market in order to raise needed cash. Investments are sold at fire sale prices, and money is being withdrawn rather than being reinvested. It’s the worst double-whammy of all.

The good news is, such a predicament can be avoided. When near-term expenses are known or expected, it makes sense to hold that sum in safe cash-equivalents and away from volatile investment markets.

3. Keep a Balanced Portfolio

A third investment strategy to defend against uncertainty is to maintain a balanced investment portfolio. While investment gurus may tell younger investors to be fully invested in the stock market at all times, balanced portfolios are no shrinking violets! Balanced portfolios—mixing stocks, bonds, and cash—can still offer solid returns over time, with less risk.

With patience and discipline, balanced investing can help you earn a reasonable return while reducing the emotional roller coaster. And let’s be honest: peace of mind is an important investment in your mental health.

4. Avoid the Hype

Here’s a fourth hot tip: Ignore hot tips! They typically involve one-hit wonders where the horse is already out of the barn. Hot tips are speculative and risky. Investing is not the same as gambling—stick to sound, long-term strategies.

…This information overload can cause what I call ‘paralysis by analysis.’

Investing Is a Tool for the Long Term

You may be asking, “What if I don’t have a long run in front of me?” If you’re enjoying retirement and have adjusted your portfolio for this stage in your life, you might not need to change a thing.

Except for this. One of the most impactful things you can do is share your experience with the young people in your life. Anything you can do to encourage them to save and invest early will be a winning strategy. You may see some eyes rolling, but keep at it. You will be heard, and your loved ones will benefit down the road.

Talk about a winning investment strategy. That might be the best one yet!

This article is for informational purposes only and is not intended to provide any specific advice. Consult with your personal financial advisor for advice specific to your goals and needs.