4 habits of successful investors in volatile times

News about the upcoming election cycle, recent bouts of market volatility, record low interest rates and slow global growth may cause uncertainty among some clients about the best way to position their portfolio. The latest Investor newsletter offers four habits many of the most successful investors follow to avoid chasing returns or missing out on opportunities. Help your clients practice these habits, too:

  1. Reality-check your clients’ return and volatility expectations Russell Investments strategists believe returns will be lower and volatility higher in the foreseeable future compared to the environment experienced since the Global Financial Crisis in 2008. Adjusting expectations in advance will reduce disappointment and make it easier for investors to stick to their long-term strategic plan.
  2. Diversify… intelligently Diversification doesn’t protect against loss but its potential benefits are well-established. At the same time, in a low return environment, every source of potential return counts, so it can help to look beyond the traditional investment options. In addition, market volatility requires that all sources of return have differentiated return patterns so that the potential diversification benefits can shine through when your client most needs them.
  3. When appropriate, capitalize on the silver lining of volatility In the emotional turmoil caused by market volatility, many clients forget that volatility has a silver lining: it provides potential opportunities to build significant longer term returns. These opportunities are especially important in today’s low return environment.
  4. Get your clients’ financial plan right – then help them stick to it Ensuring that a client’s financial plan reflects their long-term desired outcomes, is consistent with their circumstances and preferences, and is able to withstand varying market cycles is critical. It will help give clients the confidence necessary to stick to their plan when markets test their resolve.

Consider sharing the latest Investor newsletter with your clients to give them a jump start in practicing these good investing habits.

The bottom line

Investors everywhere are grappling with the question “How do I meet my financial goals in this low return, high volatility market?” As their trusted financial advisor, you can help them recognize that practicing some key, good investing habits in their partnership with you can help them a long way toward their long-term goals.