4 habits of successful investors in volatile times

October 4, 2016 Categories: Portfolio Corner
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4 habits of successful investors in volatile times

News about the upcoming election cycle, recent bouts of market volatility, record low interest rates and slow global growth may cause uncertainty among some clients about the best way to position their portfolio. The latest Investor newsletter offers four habits many of the most successful investors follow to avoid chasing returns or missing out on opportunities. Help your clients practice these habits, too:

  1. Reality-check your clients’ return and volatility expectations
    Russell Investments strategists believe returns will be lower and volatility higher in the foreseeable future compared to the environment experienced since the Global Financial Crisis in 2008. Adjusting expectations in advance will reduce disappointment and make it easier for investors to stick to their long-term strategic plan.
  2. Diversify… intelligently
    Diversification doesn’t protect against loss but its potential benefits are well-established. At the same time, in a low return environment, every source of potential return counts, so it can help to look beyond the traditional investment options. In addition, market volatility requires that all sources of return have differentiated return patterns so that the potential diversification benefits can shine through when your client most needs them.
  3. When appropriate, capitalize on the silver lining of volatility
    In the emotional turmoil caused by market volatility, many clients forget that volatility has a silver lining: it provides potential opportunities to build significant longer term returns. These opportunities are especially important in today’s low return environment.
  4. Get your clients’ financial plan right – then help them stick to it
    Ensuring that a client’s financial plan reflects their long-term desired outcomes, is consistent with their circumstances and preferences, and is able to withstand varying market cycles is critical. It will help give clients the confidence necessary to stick to their plan when markets test their resolve.

Consider sharing the latest Investor newsletter with your clients to give them a jump start in practicing these good investing habits.

The bottom line

Investors everywhere are grappling with the question “How do I meet my financial goals in this low return, high volatility market?” As their trusted financial advisor, you can help them recognize that practicing some key, good investing habits in their partnership with you can help them a long way toward their long-term goals.

Disclosures:

These views are subject to change at any time based upon market or other conditions and are current as of the date at the top of the page. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity.

This material is not an offer, solicitation or recommendation to purchase any security.

Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.

Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.

The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.

The information, analysis and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual entity.

Russell Investments’ ownership is composed of a majority stake held by funds managed by TA Associates with minority stakes held by funds managed by Reverence Capital Partners and Russell Investments’ management.

Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell trademarks, which the members of the Russell Investments group of companies are permitted to use under license from Frank Russell Company. The members of the Russell Investments group of companies are not affiliated in any manner with Frank Russell Company or any entity operating under the “FTSE RUSSELL” brand.

The Russell logo is a trademark and service mark of Russell Investments.

Copyright © Russell Investments 2016. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an “as is” basis without warranty.

Russell Investments Financial Services, LLC, member FINRA (www.finra.org), part of Russell Investments.

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