Investors are asking if there is a link between financial market performance and current geopolitical events. The worry is that the overseas crisis might significantly impact investment portfolios. As geopolitical circumstances unfold between Russia and Ukraine, it’s commendable to obtain investment management in San Antonio, TX, to fully understand how you’re financially impacted and what you can do about it.
Bear and bull markets offer vast opportunities to grow wealth. A Texas financial advisor can serve as your ally in the investing arena and well beyond. Having a financial plan and investment strategy in place can be your saving grace.
Our wealth advisory firm in San Antonio specializes in Faith-based Investing – connect with PAX to see if it’s right for you.
The Impact Of Geopolitical Events On Investments
The ripple effect of geopolitical events reaches far and wide, but usually in the short term. A Vanguard study that analyzed 22 geopolitical events proves that initial news usually creates adverse reactions in equity markets. However, geopolitical sell-offs prove to be short-lived, as returns after 12-months tend to align with long-term average returns.
To be more precise, on average, the market decline after an event (approximately 37 days) was 4%. Six months after an event, U.S. stocks had a 5% total return and a 9% total return 12 months after.
What does this tell you? Maintaining perspectives in uncertain economic conditions is the key to preserving your wealth—don’t react to the market noise. You can potentially reach more of your financial goals with a team of financial professionals who have devoted their lives to managing wealth on your behalf.
How To Stay Informed About Global Events
If you fear worldwide economic upheaval due to the sanctions against Russia, fear not. For those that follow the market, you might know that inflation and fears that interest rates would rise (as they are) have caused the stock market to lose 10% of its value since the start of 2022. This is not terrible, considering what we have undergone over the past two years. It’s actually a very normal correction, which we see all the time.
Staying informed about economic turmoil can essentially help you predict what is to come—this does not mean preparing to pull out. Watching or reading about global economic news can provide ongoing insight. This can also help you build financial literacy and determine your money mindset.
The best financial advice will come from your trusted investment advisory firm. Working with a fiduciary financial advisor ensures they are legally and ethically obligated to put the client’s best interests first. It’s safest to hire a fee-based advisor who will not profit from a commission. This will ensure no inside risks (like hiring the wrong advisor).
Tips For Protecting Your Investments During Times Of Political Unrest
If you are worried about your post-pandemic retirement funds, it’s best to wait out the storm. It’s not advised to sell off investments in a global or domestic crisis; this can be very costly. After all, abrupt stock market downturns are unrealized losses for investors who practice patience. Losses become realized once you act on them.
Reduce any anxiety or stress by revisiting your financial plan with an experienced investment advisor. Remember, the market is reactive, and correction is entirely normal during and after a time of crisis.
These general tips can help protect your investments during times of geopolitical unrest:
- Plan for surprises—don’t try to adjust to each one
- Create or revisit your financial plan or retirement plan
- Revisit your risk tolerance and time horizon
- Reassess your portfolio
- Discuss adjusting allocations with your advisor
- Diversify, diversify, diversify
To drive the point home, more diversification is better, as it lowers your portfolio volatility and increases your chances of achieving the best financial results.
Strategies For Investing In A Volatile Market
Use your energy to focus on what you can control—not things you can’t. It’s easy to get lost in the market noise if you allow it. Instead, strategize with your advisor:
- Set clear, realistic investment goals
- Develop an appropriate asset allocation with diversified funds
- Minimize investment costs
- Maintain perspective
- Apply financial discipline
- Consider target investments
- Invest in new opportunities
In terms of new investment opportunities related to the current market (due to geopolitical issues), ask your advisor about green stocks, agriculture, and cybersecurity. When you look at the current market condition (inflation), investing in energy, financial, and industrial sectors can be advantageous, as they perform well in times of higher interest rates.
As a rule of thumb, invest as much as possible in your 401(k) each paycheck if you are still in the workforce. Open a traditional IRA or Roth IRA if you have not yet, and contribute as much as you can each year.
7 Questions To Ask Yourself When Making Investment Decisions in Volatile Market Conditions
To help you stay the course, ask your financial advisor these questions if you feel the need.
- How have recent drops in the market affected my financial plan?
- Should I consider adjusting my financial future goals?
- Can I still generate enough wealth to maintain my desired retirement lifestyle?
- How can I make sure that I don’t outlive my money?
- Do I have enough protected income in my plan to meet my essential expenses?
- Should I adjust my planned retirement date? (for pre-retirees)
- Should I reconsider my post-career job status? (for post-retirees)
Remember, do your due diligence when looking for the best advisors in Texas. A fiduciary financial advisory firm like PAX has a legal duty to prioritize your best interests. Bound by law to act in good faith and in the highest trust, we look forward to supporting you and your family for years to come.
Make sure any wealth advisors you work with align with your beliefs. Find a firm that is right for you. After all, a long-term relationship with your advisor can help you build wealth. Set up a no-obligation meeting with us today.
Call PAX to discuss what wealth means to you and how you can invest smarter given the current circumstances. We are in this together!
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.