Is a Downturn On the Horizon? How We Watch Over Your Money

Is a Downturn On the Horizon? How We Watch Over Your Money

By Aspire Advisors

With inflation soaring to new highs, the Federal Reserve responded recently by raising the key interest rate by three-quarters of a percentage point—its biggest rate hike since 1994. While the markets initially seemed pleased with the Fed’s aggressive move, stock prices quickly fell again as it became apparent that this rate hike would likely be the first of many.  

As monetary policy continues to tighten and consumer prices continue to rise, many are fearful that an economic downturn is on the horizon. In recent weeks we’ve frequently been asked when the market will reach its bottom. Despite the volatility, our answer remains: Rather than “timing the market,” focus on “time in the market.”

Here is how we take proactive steps to help safeguard your wealth:

Big-Picture Planning

We don’t make investment decisions based on what everyone else is doing or what is popular in the investment industry. Whenever we make planning decisions and offer investment recommendations, we do it with your goals in mind. When the markets get shaky, remember that we have considered some market volatility when designing your plan.  

We watch the markets closely and make strategic adjustments in our investment approach when we see an opportunity or a risk on the horizon. Recently, we made changes to our clients’ bond portfolios, reducing the risk to credit sensitive assets, such as bank loan and mortgage-backed securities, and adding short-term treasuries with lower risk and a very attractive yield of close to 3%. We are constantly surveying the stock and bond markets for these types of opportunities to add value to your long-term returns.

We Know Your Risk Tolerance 

All investments have some level of risk. It is simply the price that must be paid for participating in the opportunity for growth. But, before investing any of your money, we conduct an in-depth assessment of your willingness and your ability to assume investment risk, taking into account your needs and cash flow. By evaluating risk capacity both subjectively and objectively, we only make allocation recommendations with an appropriate level of risk exposure for your unique circumstances.

In general, the concept of risk tends to be more palatable when the markets are performing well, as we often feel loss more intensely than we perceive gains. Because we look at your ability to take risk—and not just how you feel about it—we help position you to meet your spending needs without disrupting your long-term objectives.

We also understand that like most things in life, your risk tolerance may change with age, income, and other life events. This is why we schedule regular account reviews and make allocation adjustments as your needs change over time.

Timing Matters

During bear markets, it’s important to remember that investors only realize losses when they sell, so it is usually best not to sell when the market is down. Your investment time horizon is an important factor in avoiding those losses. 

For example, if you are a decade or more away from retirement, you can likely wait out a recession or correction and benefit from the recovery. If you need access to your funds in the next five years or are within your first five years of retirement (frequently known as the “fragile decade”), (1) a recession will make more of an impact on your money and your plans. From a practical perspective, we make sure your portfolio’s allocation is established with your time horizon in mind, taking into account both your short-term and long-term goals.

We Are Your Emotional Support System

There is no doubt stocks have suffered in the first half of this year. But the market has shown us that, over time, it is quite resilient. Historically, upturns have been much stronger than downturns.  Bear markets have come before and they will come again, but if you have created a solid financial plan based on your risk capacity and time horizon, you have done your part to prepare. 

It is normal to feel anxious when the market is volatile, but, in the end, patience and persistence usually pay off more than short-term emotional decisions. If you are concerned about volatility, we are always available to review your portfolio, offer perspective, and make adjustments if needed.  

If you don’t have someone you can turn to when the market gets wild, we’d love to support you and help you build your finances for a strong future. Reach out to us to schedule a complimentary consultation by calling 877-760-3540 or emailing [email protected].

About Aspire Advisors

Aspire Advisors, LLC is an independent, fee-only financial advisory firm providing financial planning and investment management solutions for clients throughout Westchester County and the broader tri-state area. The Aspire team has a long track record of helping individual investors, nonprofits, hospitals, physicians, and healthcare executives. As a registered investment advisor, Aspire is a fiduciary and has a legal obligation to act in their clients’ best interests. To learn more about what it’s like to work with Aspire Advisors, visit aspireadvisorsllc.com.

This information represents the general views of Aspire Advisors and is presented for educational purposes only. This information should not be construed as investment advice or a recommendation to buy or sell any security. Investing in securities involves risk of loss. Past performance is not an indication of future performance.

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(1) https://www.lifehealth.com/navigating-retirements-fragile-decade/