Money Matters
presented by: Vision Financial Group, www.vision-financialgroup.com
Conventional wisdom says that what goes up, must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when it’s your money at stake. Though there’s no foolproof way to handle the ups and downs of the stock market, the following common sense tips can help.
Don’t put your eggs all in one basket. Diversifying your investment portfolio, by buying asset classes that often perform differently under different market conditions, such as stocks, bonds, and cash alternatives, is one of the key ways you can handle market volatility. Ideally, a decline in one type of asset will be balanced out by a gain in another. One way to diversify your portfolio is through asset allocation, which involves identifying the asset classes that are appropriate for you and allocating a certain percentage of your investment dollars to each class (e.g., 70 percent to stocks, 20 percent to bonds, 10 percent to cash alternatives). Your asset allocation should be based on your investment objectives, risk tolerance level, and investment time horizon, and be tailored to your unique circumstances.
Focus on the forest, not on the trees. As the markets go up and down, it’s easy to become too focused on day-to-day returns. Instead, keep your eyes on your long-term investing goals and your overall portfolio. Although only you can decide how much investment risk you can handle, if you still have years to invest, don’t overestimate the effect of short-term price fluctuations on your portfolio.
Look before you leap.When the market goes down and investment losses pile up, you may be tempted to pull out of the stock market altogether and look for less volatile investments. But before you leap into a different investment strategy, make sure you’re doing it for the right reasons. How you choose to invest your money should be consistent with your goals and time horizon. For instance, putting a larger percentage of your investment dollars into vehicles that offer safety of principal and liquidity may be the right strategy for you if your investment goals are short-term. But if you still have years to invest, keep in mind that although past performance is no guarantee of future results, stocks have historically outperformed stable value investments over time.
Look for the silver lining. The silver lining of a down market is the opportunity you have to buy shares of stock at lower prices. One of the ways you can do this is by using dollar cost averaging. You don’t try to “time the market” by buying shares at the moment when the price is lowest. In fact, you don’t worry about price at all. Instead, you invest the same amount of money at regular intervals over time. A workplace savings plan, such as a 401(k) plan in which the same amount is deducted from each paycheck and invested through the plan, is a well-known example of dollar cost averaging in action.
–Mike Mungenast, Sr. Vice President, Senior Advisor 
Vision Financial Group
4505 Pine Tree Circle, Birmingham, AL 35243
205-970-4909, www.vision-financialgroup.com
Investment advisory services offered through Investment Advisors, a division of ProEquities, Inc., a Registered Investment Advisor. Securities offered through ProEquities Inc., a registered broker-dealer and member of FINRA and SIPC. Vision Financial Group, Inc. and West Alabama Bank are independent of ProEquities, Inc. Securities and insurance products offered are not bank deposits, have no bank guarantee, are not FDIC insured, and may lose value. 2018 Broadridge Investor Communication Solutions, Inc. All rights reserved.
