![]() futures rose and oil prices also were higher. Tokyo, Sydney and Shanghai advanced while Hong Kong and Seoul declined. You should consult with a licensed professional for advice concerning your specific situation.įorbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms.Stocks were mixed in Asia on Tuesday after closing broadly lower on Wall Street, where the Dow Jones Industrial Average fell into what’s known as a bear market. The information provided here is not investment, tax, or financial advice. ![]() More importantly, investors who have conviction in their investment plan are less likely to panic when the market turns against them. A diversified portfolio of high-quality stocks can help reduce volatility while compounding returns over the long term. A sound investment strategy already accounts for potential negative returns in the market.įor investors with a 10-to-20-year-plus time horizon, a 30% market decline will be shown as nothing more than a blip in your long-term investment performance. However, if you have a well-conceived investment plan and stay focused on your investment objectives, you don't have to be as concerned with short-term fluctuations. ![]() The stock market is always going to fluctuate. These types of alternative investments may be suitable for ultrahigh net worth investors with long time horizons and the excess discretionary capital to commit to them, but they may be unsuitable for a typical retirement portfolio. Many of these investments are subject to fewer disclosure rules or less oversight by the Securities and Exchange Commission. In addition, many alternative investments use a high amount of leverage.įinally, they can be pretty complicated to understand. That's on top of the high fees associated with the investments. Secondly, they're also illiquid because they charge penalties to get out early. ![]() That makes it difficult to price them, so it's hard to gauge their worth. Firstly, they are illiquid because there is no active market for them. While assets such as private equity, hedge funds, real estate and collectibles may be holding up better than the stock market right now, there are some significant trade-offs with owning them. Some financial advisors are pushing alternative investments to counter the stock market's volatility and poor performance. You Don't Know What You're Getting With Alternative Investments For example, at 8% inflation, a CD yielding 2% results is a net loss of 6% on your money. Even as rates on savings accounts and CDs rebound from historic lows, they're still significantly less than the rate of inflation. Sitting in cash and avoiding the stock market chaos may feel better for the moment, but in today's inflationary environment, you are guaranteed to lose money. Those who sat out the 10 best days missed out on 55% gains. According to Fidelity Investments, investors who missed the five best trading days over the past 40 years saw their long-term gains reduced by 38%. In that case, you are likely to miss the biggest gains, further hampering your ability to recoup your losses and hurting your long-term investment performance. Secondly, suppose you are sitting on the sidelines to avoid the worst days of the stock market.
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