Matthew A. Treskovich
If you’ve been watching the market lately, you’re probably wondering if it’s time to make some changes to your investments.
When the market is volatile, it’s natural to feel the urge to do something. History shows that making changes just because the market is turbulent is usually not a good idea. If you had a strong portfolio that supported your financial goals at the start of the year, it’s probably still the right portfolio now.
However, there are a few exceptions to the rule. If you are unsure of the contents of your portfolio or if your financial plan has changed, now is a good time to take stock.
Use some direction
Every day there are new headlines about rising inflation, rising interest rates and geopolitical unrest. When markets get turbulent, everyone tends to focus on the bad news.
There is plenty of good news to discover if you take the time to look for it.
Unemployment remains at historically low levels. American consumers still have money and access to credit, and continue to do what they do best: spend money.
As an investor, you have to worry when people don’t work and stop spending money. As long as American consumers continue to work and spend, the economy will be fine.
Investing in companies that make money when consumers spend money is a proven strategy for success.
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Know what you own and why
Investments are only part of your overall financial plan. Every investment you own is like a puzzle piece. It should fit somewhere in your financial situation, and it should be there for a reason.
If you have investments in your portfolio that you don’t understand or why you own them, it’s time to take a step back and think about the big picture. If you own mutual funds or exchange-traded funds, ask yourself what each is used for in your portfolio. Investors who own individual stocks should have an idea of what each company does and how that company makes money.
Don’t make things more complicated than they should be. Many investors make the mistake of relying too much on so-called experts, official statistics and fancy infographics. The best investment ideas are usually simple and understandable.
The best portfolio is one that allows your long-term financial plan to work. When it comes to investing, a little common sense goes a long way.
Matthew Treskovich is a CPA Financial Planner and Chief Investment Officer at CPS Investment Advisors. He can be contacted at [email protected]