Investing Confidently Amid Conflict
As events in Eastern Europe quickly unfold, we’ve seen how this humanitarian crisis has not only affected the lives of those in Eastern Europe, but also the livelihoods of those all around the world. As the stock markets react, many of our clients have expressed concerns with how these events will affect their life plans, investments, and finances. Especially in this chaotic market, here are some ways to become a confident investor.
- Consider historical facts and statistics. In reaction to each major geopolitical event since WWII, on average, the value of U.S. stocks was higher only three months after the event (Reuters, 2022). The average recovery time for the market has also been less than seven weeks with a post-event loss of only 5% (LPL Financial, 2022). Historically, the U.S. economy has been resilient to geopolitical shocks, and this time should not be an exception.
- Resist emotional decisions. As the market wildly fluctuates in response to this conflict, it is natural to be fearful. The volatility and uncertainty in the world can be challenging for even the most confident investors. The common impulse may be to sell, but historical statistics have proven this to be disadvantageous for most long-term investors. Confident investors act based on logic and reason, especially when times get tough. They remain committed to their long-term financial plans.
- Educate yourself on how markets work. A stronger understanding of a subject area often leads to confidence. Try attending webinars and seminars addressing topics such as market fluctuations, historical volatility, and current investing trends. You could also try working with an experienced financial advisor who knows you and your personal situation. The more investing experiences under our belt, the more our confidence can grow.
While it is impossible to know how this conflict will play out, it is important not to panic and make rash decisions about our investments. Stocks have become less expensive recently, and interest rates remain low. These are all positive signs for investments. We encourage you to be a confident investor—be patient and stick to your long-term financial plan.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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