If you’re going to invest your hard-earned money in stocks, bonds, and other assets this year, let humility lead the way.
After all, the market has been rocked for the past 3 years because of an unforeseen event that is the pandemic. Other threats include conflict in Ukraine and the list goes on and on.
Faced with that situation, stocks and bonds fell simultaneously and ended 2022 in the red.
So what will happen in 2023. The International Monetary Fund (IMF) is predicting a third of the world economy will be in recession. Moody’s Analytics predicts that the US in particular may be completely out of the recession, but still experience a period of slow growth.
Some stock analysts think tech stocks, which have struggled in 2022, are likely to have a brighter year.
As for real estate, economists and observers offer a variety of opinions. Some people predict that housing prices will increase by 5%, while others predict that prices will drop 20% from the peak.
But regardless of the predictions, investors need to be vigilant in managing their portfolios.
It is very difficult to invest effectively without knowing what you need and when.
Financial planner Taylor Wilson, chairman of Greenstone Wealth Management, said: “Individual investors are forced to create a financial plan, outline their goals, and define their own financial position before setting up or rebalancing your portfolio”.
It also means that investors need to be honest with themselves about their tolerance for loss. Investors need to understand that taking risks is a necessary part of achieving long-term goals, especially in times of high inflation.
Skip the noise
Whether 2023 is a bad year or a great year for the stock market, or both in different ways, that should not affect each person’s investment decisions.
The best way to not be “manipulated” by too much news is to establish a simple routine. You need to set aside a steady amount each month for a diversified portfolio of stocks and bonds.
What is a reasonable investment portfolio?
If you have a reasonable time horizon, but don’t like high risk, then a balanced portfolio of stocks and bonds might work for you in 2023.
In the wake of recession fears, Wilson noted that value stocks, which typically represent companies with strong fundamentals but undervalued, tend to perform better during recessions of economic recession. These companies typically pay higher dividends, which help maintain high profits.
The expert said higher-yield bonds could also be an attractive option.
For investors with a long-term vision and high risk tolerance, Wilson suggests looking for bottom-fishing opportunities. “Look for good companies that are oversold and avoid companies that may not have the income or balance sheet to survive this potential downturn.”
And for near-and-retirees who need to preserve assets to have enough money to spend the next five years, he recommends a bond ladder strategy, as yields are at their highest in more than a year decade.
Be careful with cryptocurrencies
The “Crypto Winter” of 2022 pushed Bitcoin down nearly 65%. Stablecoin TerraUSD has dropped to just 2 cents, down 98% against the USD anchor. Meanwhile, several key crypto trading platforms such as FTX, Voyager, and Celsius have collapsed due to allegations of mismanagement and fraud.
Regardless of an investor’s view of the long-term potential of cryptocurrencies, cryptocurrencies remain an area of loose control and uncertainty, leaving individual investors vulnerable to losing money when things go wrong. Don’t invest money you can’t lose.
Certified financial advisor Ryan Sterling, founder of Future of You Wealth, advises his clients, who typically have at least $500,000 in assets in their portfolios, to maintain exposure to all All cryptocurrencies are less than 3% of their total portfolio.
If the allocation level for cryptocurrencies has dropped from the original level, Sterling advises investors to keep it at that level.
Know your limits
No matter how smart or well-trained you are, volatility in investing cannot be completely avoided. But you are not alone.
According to financial behavior expert Daniel Crosby, people are easily swayed by a certain trend and can hurt their wallets.
Emotions of tension, excitement, or focusing too much on negative information, telling yourself everything, or preferring to choose what you know can lead investors to make bad decisions.
But by acknowledging those trends and addressing the issue, investors can avoid losses.
According to CNN