HUNTSVILLE, Ala. (WAF) – The uncertainty in the current stock market can make it difficult to make sound financial judgments.
Marshall Clay, financial expert at The Welch Group, explains the basics of portfolio construction and investing.
“Looking back to 2022, it was a very chaotic market,” Clay said. “It can cause people to panic and make very binary decisions.
A certified financial planner adds the key to managing your risks and understanding what you’re working with.
“You have to trust your portfolio and you have to understand how your portfolio is going to react in different market environments,” Clay explains. “I think understanding that there are no guarantees to invest. It’s all about the probabilities of different outcomes.”
While there are inherent risks, Clay says investors should avoid “jumping in and out of markets because that can be a recipe for disaster.”
Not only that, the financial expert says it’s important to prepare ahead of time and understand the changing and sometimes volatile markets. Clay also points out how timing can work for or against you.
“Your schedule is important. If you’re a younger investor and have a really long time frame, these really volatile times shouldn’t bother you as much. You have to really look at them as an opportunity to get more money into the markets,” he said.
Then there are people, a little further down the road.
“I think if you’re closer to retirement, you should roll up your sleeves and protect your assets a little more. Putting you in a more conservative position,” Clay said.
The money guru mentioned a different timeline and a variety of assets that should make any investor feel comfortable.
“Three years of your potential cash flow from your portfolio and really safe and secure assets. Ideally, you want it to be closer to 10 years,” Clay said. “So you know when, not if, but when these volatile markets happen, you know where your cash flow is coming from.”
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