Managing Risk in an Unpredictable Market
In an environment where headlines often focus on inflation, interest rates, and geopolitical tension, market uncertainty has become a major concern for many investors. But uncertainty doesn’t have to lead to inaction. With thoughtful planning and risk management, investors can stay on course—even when the market feels anything but predictable.
One of the most effective ways to navigate volatility is through proper risk management. Rather than trying to eliminate risk entirely, the goal is to understand where it exists and take steps to reduce exposure where appropriate. This includes building a diversified portfolio, having a clear asset allocation strategy, and maintaining appropriate insurance coverage to protect income and assets.
Aligning Asset Allocation with Life Stage and Goals
Asset allocation—the process of dividing investments among different asset classes such as stocks, bonds and cash—is another key element. This strategy allows investors to tailor their portfolio to match their risk tolerance, goals and time horizon. For example, someone closer to retirement may reduce exposure to equities while increasing holdings in fixed income or dividend-paying stocks. On the other hand, investors with a long runway may lean more heavily into growth-oriented investments.
While market risk gets the most attention, personal risk can be just as important. Unexpected life events—such as disability, long-term care needs or premature death—can force individuals to dip into retirement savings prematurely, especially if proper protections aren’t in place. Tools like disability income insurance, life insurance and long-term care policies can help shield a financial plan from these events, preserving savings for their intended purpose.
Planning for Stability and Long-Term Success
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Having different financial resources serve specific functions is another smart planning strategy. Instead of relying solely on investment accounts to both grow wealth and provide emergency liquidity, separating these roles improves long-term outcomes. An emergency fund, for instance, keeps investors from having to sell long-term investments at a loss during downturns.
In retirement, matching durable expenses with durable income sources—such as Social Security, pensions or annuity income—can add a layer of stability to a retirement plan. This approach helps ensure essential expenses are covered regardless of market performance, while allowing more flexibility with the remainder of a portfolio.
Ultimately, staying invested through uncertain times requires a personalized strategy that goes beyond reacting to market noise. With the right mix of planning, protection and purpose-driven investing, individuals can build a financial plan that helps them stay grounded, no matter what the markets are doing.
Seth J. Edgil and David Guttery offer products and services using the following business names: Keystone Financial Group– insurance and financial services | Ameritas Investment Company, LLC (AIC), Member FINRA/SIPC – securities and investments | Ameritas Advisory Services, LLC (AAS) – investment advisory services. AIC and AAS are not affiliated with Keystone Financial Group. Information is gathered from sources believed to be reliable; however, their accuracy cannot be guaranteed. Data provided is for informational purposes only and should not be construed as a recommendation to purchase or sell any investment product.
