As 2024 progresses, investors face a mix of familiar and novel challenges. Factors such as fixed incomes, inflation, economic instability and the approaching election significantly influence investment decisions. Let’s delve into ways to stick to your investment strategy or pave the way for new ones during challenging periods.
Gather Facts
Determining your investment goals over the next year can be complex with many factors to consider. First, how do we know that investments are a good financial decision right now? Second, assuming long term investing is our aim, how do we find ways to continue to invest?
One way to get a pulse on projected performance on the stock market is to look at the S&P 500 or the top 500 leading publicly traded companies in the U.S. Since 1957, the S&P 500 has returned a 10.26% annualized return. This is a great statistic to keep in mind as you weigh risk and investment decisions.
While each year can vary quite significantly, especially in election years, the stock market has historically yielded a positive result over time. Consider focusing on the long game with investments and ride out the year. Avoid pulling your investments out of the stock market during volatile periods or simply out of fear. The gain in the long run is worth the wait.
Diversification is another tactic to consider when you feel uncertain about investments. Splitting out investments into a variety of different buckets like small-cap, large-cap or international buckets can protect you from risk. Also, consider lower-risk stocks or annuities if you are looking for a more conservative avenue.
Set Investment Goal
Now that we have explored the risks and rewards associated with the stock market, let’s review ways to contribute to investment accounts.
Setting a goal is an easy tactic to overlook, but setting a realistic and attainable goal will keep you consistent and accountable. When you play with investment scenarios and factor in compound interest, you may be surprised by how little you actually would need to invest to attain big goals.
In theory, if you invested $300 per month for 30 years at the average 10% return rate, you would end up with approximately $3,116,832.
Take it a step further and set secondary investment goals. Already investing steadily in your company-sponsored 401k? Set a smaller, supplementary investment goal in a more flexible investment vehicle that could increase net worth.
Reduce Debts, Increase Income
Difficult finding enough room in your budget to invest? You are not alone. Committing your funds to long-term investments can be easier said and done, especially in an inflationary environment. Paying off debt and finding short-term solutions to increase income can be two impactful tools to create a little room in your financial picture.
Consider snowball or avalanche methods to knock out some debt eating into your income. In the meantime, ask for extra hours at work or try out other side hustles to bring in some extra income. The investment of time and money will be well worth it.
Automate
Whether you are beginning to invest for the first time or you are a seasoned pro, automating is one way to take your investment game to the next level. Set up retirement fund automation through your employer-sponsored 401k as the first step toward consistent investing. Pulling this amount before you see it in your paycheck increases the chances of consistency. Then, consider using automatic investing apps for subsequent ventures.
Talk to a Pro
Have a professional in your corner. It can always be beneficial to have another set of eyes on your portfolio. Find someone who is dedicated to focusing on new developments in the industry and can take your investments from good to great.
Bankers Life is Here
Bankers Life Securities is here to support your financial goals, big and small. Reach out today to chat with a representative.
