Blog

Navigating the Roller Coaster: A Guide to Financial Wellness in 2024 Amidst Market Volatility and Uncertainty

We understand that real estate isn’t the ONLY thing our readers think about. We love to invite professionals from the community to help address topics that matter to you all around.

So, help us welcome Drew Kelleher, Senior Wealth Advisor at Denver Private Wealth Management. With over 14 years in the financial industry, he is a CERTIFIED FINANCIAL PLANNER™ dedicated to making impactful financial planning decisions for individuals and families. Drew is a Denver native and family man, he is kind enough to share his expertise in this guest blog, offering unique insights into meaningful financial and investment planning. He is our guest writer today and he is here to help walk alongside us in the world of wealth management!

                                                                                                                                                                      

Does the stock market have you feeling like your hair is on fire?

It’s certainly been a roller coaster of emotions as it swings up and down these past few years. If that’s not enough, we’ve got an election year coming up, Federal Reserve decisions on interest rates, and seeing what further happens with this inflation. That being said, it’s good to remember that this is all normal - volatility very much remains a constant in our investment horizon.

However, it doesn’t have to derail your overall game plan. In fact, 24 of the last 43 years included a double-digit market decline – but then ended the year with positive returns 75% of the time!1 If you find yourself tuning into the talking heads and stressing yourself over all the daily market headlines, remember that one of the big objectives of these major news outlets is to keep eyeballs on the screen as long as they can.

Take a step back, take a deep breath, and think about your personal situation and how you can use these markets to your advantage. 

Let’s get into some of the recent themes regarding the economy wrapping up this year as we approach 2024: 

Stronger economic growth, but the economic momentum looks to be slowing down. Concerns regarding a recession are still in the mix for late 2024. 
Inflation has been falling to more reasonable levels 
The Fed should be near or possibly at the end of its rate hiking cycle 
Sluggish growth from global economy, but valuations still show opportunities 
With uncertainty ahead, alternative investments remain an attractive diversifier and complement to our portfolios

Generally speaking, there is a lot of mixed data – some good, some bad. There is a lot of pessimism regarding the economic outlook, yet stocks have had a good year so far. Corporate profits have held up, and this year especially we are seeing technology stocks providing the biggest performance mainly due to the buzz surrounding Artificial Intelligence. 

As one recent client pointed out after these conversations, “……. So you’re saying the market could keep going up…. Or it could go down…”.  Yes. And that is just fine. Do you need to find the exact right sectors or countries to invest in right now?! Investing takes a lot of work – you need to have the time, desire, and skill to put together a well-rounded portfolio and overall financial plan. If one of those aspects is lagging, you may not necessarily be in the best position to capitalize on the opportunities ahead.

So, what is an investor to do – well, let’s go back to some of the investing fundamentals to keep in mind: 

Avoid emotional investment decisions. Trying to time the market has very rarely if ever worked. Going back to 1930, if an investor in the S&P 500 missed the 10 best days of each decade, the total return would be 28%. However, if the investor stayed the course through the ups and downs, that return would have been 17,715%!2
Diversification can have a deep impact. In recent years, we’ve seen natural disasters, a global pandemic, geopolitical conflicts, market downturns, and so much more. Yet over the last 15 years, a well-diversified portfolio of stocks, bonds and uncorrelated assets has returned over 6% per year.3
Plan on investing for a long-time horizon. People are living longer, medicine is more advanced, and the probability of living decades after retirement is very real. Consider investing and saving accordingly. 
Compounding interest is a powerful tool. The concepts of compounding and patience are the keys to building wealth. Get started as soon as possible.  
Cash management strategies – while interest rates have become more attractive, we should still keep a well-diversified portfolio. There is an opportunity cost associated with cash – keep in mind there are other attractive fixed income investments offering higher yields and not to mention stocks historically have outpaced inflation. 
Develop your own personal financial plan – weigh in on your short term and long-term goals. What is important to you in life? Money is a tool, not a destination. Put your money to work in the most efficient way possible to live the life you want and desire. 

We know we can expect volatility and uncertainty going into the new year. But we can also be at ease with this knowledge and view this as an opportunity for the long run. Don’t get caught up in the news that the world is ending; it’s just a bit bumpy. Maybe, AI and robots take over the workforce soon and maybe the hover board from Back to the Future is finally invented. Maybe we start living on Mars soon. Who knows. But if this brings you anxiety and feelings of uneasiness, it may be best to talk to a professional. CERTIFIED FINANCIAL PLANNERS are there to guide you through these events, create a personal plan for your unique situation, and ultimately instill confidence and bring peace of mind to your overall financial landscape.  

Having touched on the recent themes of the year and some of the fundamentals of investing, hopefully the benefit to you is that you are ready to go into 2024 knowing the markets have been here before, seen much worse, and that volatility is very normal given the circumstances. My ask is that you take some time as we wrap up the year to review your personal situation and make sure that you are on track to meet your specific needs and goals. Both your financial and non-financial goals, making sure that your money is working for you to accomplish your personal hopes and desires - whatever fills your cup and makes you feel alive.  

1. J.P. Morgan, Market Insights, June 30, 2023

2. CNBC, “This Chart Shows Why Investors Should Never Try to Time the Stock Market,” March 24, 2021

3. J.P. Morgan, Market Insights, June 30, 2023

 

Work With Us

Our expansive network and white-glove service ensure a bespoke experience for both buyers and sellers.
Contact Us
Follow Us