HUNTSVILLE, Ala. (WAFF) – The uncertainty in the current stock market can make it challenging to make sound financial judgments.
Marshall Clay, a financial expert at The Welch Group explains the basics of portfolio construction and investing fundamentals. “Looking back to 2022, it was a very chaotic market,” Clay said. That can cause people to panic and make very binary decisions. “I’m either all in or I’m all out,” Clay said, referring to the attitude of some investors.
The Certified Financial Planner adds the key is to manage your risks, and understanding what you’re working with. “You have to have confidence in your portfolio and you have to understand how your portfolio is going to respond in different types of market environments,” Clay explains.
Clay also doesn’t sugarcoat the roller coaster investing process. “I think understanding that there’s no guarantees in investing. It’s all about probabilities of different outcomes.”
Clay mentions one thing investors should avoid. “You don’t want to be jumping in and out of the markets. That’s typically a recipe for disaster.”
Not only that, the financial expert says it’s important to prepare ahead of time, and understand the changing and sometimes volatile markets. Clay also mentions how time can work for or against you. “Your timeline matters. If you’re a younger investor and you have a really long timeline, these really volatile times shouldn’t really worry you all that much. You should actually view them as opportunities to get more money into the markets.”
Then there are the people a little further down the road. “I think if you’re closer to retirement, you need to be wrapping your arms and protecting your assets a little bit more. Putting yourself in a more conservative position,” Clay said.
The money guru mentioned a different timeline and an amount of assets that should make any investor feel comfortable. “Three years of your potential cash flow from your portfolio and really safe and secure assets. Ideally, you want that to be closer to 10 years,” Clay said. “So you know when, not if, but when these volatile markets occur, you know where your cash flow is coming from.”
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