Coronavirus-fueled fears are driving economic insecurities, aggravating a host of simmering global sore spots, and spiraling into stomach-wrenching market sell-offs …
Be it confirmed. Today’s unfolding news is the realization of those risks we’ve been talking about all along.
In case you’ve forgotten – or never experienced – what investment risk feels like, we reach out to you today with three encouraging thoughts, to help you face any challenges ahead.
1. For Real: Risks DO Drive Expected Returns
First, be assured, our advice on how to invest during volatile markets remains the same:
As a train needs its engine to move, markets require risks to drive them onward and upward.
Rather than spending too much time tracking passing headlines or watching every market move, consider reading a good book. For example, there’s Ben Carlson’s recently released “Don’t Fall For It: A Short History of Financial Scams.”
Carlson describes how the U.S. stock market (the S&P 500) has delivered a satisfying 9.5% annual return from 1928–2008. But during that time, there were only 3 years when returns hovered tamely between 9%–11%. Usually, annual returns deviated wildly from their norm.
So, yes, markets are risky. But here’s the reward to be expected in return: Most years (66 out of 91), steadfast investors earned positive returns, usually in the double-digits. Carlson concluded:
“Every successful investor must understand there is a sacred relationship between risk and reward. There is no proven way to earn a high return on your capital without taking some form of risk nor is it possible to completely extinguish risk from your investments.”
2. Preparation Beats Panic
It’s one thing to embrace abstract risk. It’s quite another to endure it for real. So, second, remember this:
You have never been more prepared than you are today for whatever happens next.
In other words, if you’re worrying that NOW is the time to do something about the markets, consider what we’ve done for our clients all along.
We’ve helped our clients identify the right balance between willingness, ability, and need to tolerate risks. We’ve created their investment plans, with assets allocated accordingly. We’ve built and manage evidence-based, globally diversified portfolio to capture the market’s long-term expected returns.
In other words, our clients are not only already “doing something,” that “something” is expected to remain their best strategy for riding out any bad news to come.
3. In the Face of Market Risks, We’ve Got Your Back
That’s one of the primary reasons our clients engaged us as their fiduciary financial advisor. If the breaking news is leaving you feeling strained to a breaking point, here’s one fast action we recommend: Please be in touch with us immediately. Together, we’ll take an objective look at your thoughts, hopes, and fears. Together, we’ll continue to chart a sensible course forward.
Come what may in the days to come, we’re here for you now.