Podcast Episode 242: Investing During a Volatile Market
The stock market has been in a state of volatility for much of the past two years but it seems like that uncertainty has ramped up even more in recent months. When we get into one of these up-and-down environments, what’s the best way to invest your money without taking on too much risk?
If you were hoping for a quiet and steady start to 2022, it doesn’t look like we’re going to get that anytime soon. Just look at some of the largest tech companies that have taken big hits already and earnings haven’t helped matters much either.
But these periods of volatility are inevitable when it comes to the market and there are ways to approach this when investing. In this episode of the Money Wisdom podcast, we’re going to talk about how to find the proper balance while limiting the amount of risk you’re comfortable taking.
When these turbulent times creep up, a lot of people will look to those large companies and blue chip stocks to find safety. An easy choice is an S&P 500 Index Fund but even that will be heavily weighted towards the top five or so companies. So while you think you’re taking a safer approach, you still end up being heavily invested in a small number of companies.
You’ll hear us talk about it a lot but it’s important to focus on diversification. This is even more true for those people that are at or near retirement and don’t want to take on all the risk of the market.
It’s okay to own the S&P 500 fund but you also might have a small cap fund and an international fund for instance. Finding different types of equities that fall into various categories helps mitigate some of that risk.
Diversification also means you should probably have some safe money, whether that means owning CDs or fixed annuities. There are some options beyond a traditional savings account that will allow you to still generate growth but limit your upside. It’s all about finding the right blend that allows you to stay exposed to the market while also keeping enough safe money to ease your worries.
These volatile times are also a great reminder that working with an advisor will serve your needs best. Having someone that’s focused on your goals and finding the investments that best align with them will give you the best long-term outcome. Working with someone that’s just trying to push you into certain investments and selling you specific products should raise a red flag.
It shouldn’t always be about the product. For us, it’s all about the plan. Our clients might not know every product that we’ve identified for them. Remember, there’s nothing wrong with a stockbroker. The issue arises when that broker acts as if they’re an advisor.
So listen through the podcast and hear what Joel Johnson has to say about this current environment we’re investing in and make sure you reach out with any questions you have.
0:32 – Volatility in the stock market
2:46 – Index funds safer?
4:48 – Strategies for diversification
6:57 – Is your advisor focused on planning or selling?
8:50 – How our process has evolved
12:35 – An overview of our process
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
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