Investment Management
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Investing can feel overwhelming at first, but starting early can simplify the process and help you build a strong financial future. Although investing involves risk, having a solid financial foundation is crucial before you begin.
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Are you ready to start investing?
Here are essential steps to ensure you're prepared to invest.
Having a reliable income is essential for successful investing. It may seem straightforward, but ensuring a steady cash flow is crucial before you start investing.
You’ve evaluated the potential impact of upcoming life changes—such as marriage, having children, or divorce—on your investment strategy.
You have extra funds available after covering your financial obligations.
You’ve established a solid savings foundation, including a 3–6-month emergency fund, before opening an investment account.
Diversify your investments to manage risk effectively
Investing in a variety of asset classes can help manage risk. By spreading your money across different types of investments, you reduce the impact of poor performance in one area on your overall portfolio.
A great example of diversification is the story of Life Savers candy. Invented by Clarence Crane in 1912 with only one flavor, Pep-O-Mint, Crane later sold the business to Edward J. Noble in 1913. Noble diversified the product line with multiple flavors, which led to a billion-dollar success. This strategy helped protect the business from the risk of any single flavor falling out of favor.
Similarly, diversifying your investments can help mitigate risk and enhance potential rewards. However, keep in mind that while diversification can reduce risk, it doesn't guarantee higher returns or protect against all market risks.
Bottomline, spread your risk to potentially improve your investment outcomes.
Understand how the economy affects your portfolio
The state of the economy (how a country uses money and resources to produce goods and services) greatly affects stock market activity. Whether the economy is growing, shrinking, or standing still, it influences stock performance.
To understand the impact of the economy on your portfolio, it helps to see how a few different economic factors affect stock prices.
Bull Market: In a bull market, investor confidence is high, leading to rising stock prices as most investments increase in value.
Bear Market: Conversely, in a bear market, investor sentiment is low, causing stock prices to fall and many stocks to become undervalued. This can present an opportunity to buy quality stocks at a discount, depending on your investment strategy.
Inflation: During inflationary periods, rising prices erode purchasing power, meaning $1 buys less than before. High inflation can reduce consumer spending and negatively impact corporate sales, leading to a drop in stock prices and overall investment values.
Low Inflation: Low inflation often signals a healthy economy, which can benefit the stock market and support rising stock prices.
Interest Rates: When interest rates rise, stock prices typically fall. Conversely, when interest rates decrease, stock prices usually increase. For example, in 2019, the Federal Reserve lowered interest rates three times to help counteract potential economic downturns and support growth.
Stay informed about market conditions to make strategic investment decisions and optimize your portfolio.
Seek professional help when you need it
FieldGuide Financial can give you hands-on personal guidance and advice to help you determine your retirement goals and how you can work toward them. Here’s how we can help you:
Understand different types of investments and their place in a balanced investment portfolio.
Determine your financial goals, such as retirement, buying a home, funding a college education, starting your own business, or just getting better at budgeting and paying down credit card debt.
Determine an appropriate investment strategy for your financial goals, based on your risk tolerance and timeframe.
At FieldGuide Financial, we’ll help you with professionally managed investment strategies tailored to your interests, with regular meetings to track progress and make necessary adjustments.