With a bear market in full effect, now is the time to optimize your investing strategies for 2023.
Recession scares, a bear market and political change - all pain points when it comes to financial planning and confidence. With this in mind, optimizing investing strategies becomes paramount. By ensuring that every dollar counts, you can maximize your chances of a positive outcome.
From well known concepts like “diversification” to the strategy of “dollar-cost averaging”, below are our top 5 tips to optimize your investing strategy in 2023 and have your portfolio on top.
Diversification
Diversification is a simple concept but powerful in how it can reward your financial portfolio. Consider someone who focuses their asset allocation in health, tech and energy. If tech sees a downturn - like it has recently - you could see a significant portion of your portfolio dip.
If you were to expand your portfolio and diversify with the additions of consumer staples (food, etc.) and retail (big box stores), you’ve now increased your investment surface area which reduces your chance of a fatal blow even if a percentage of your assets take a dive.
Roth IRA
A Roth IRA is a type of individual retirement account that allows you to contribute taxed-dollars that can grow with no taxes upon distribution. Because of this, Roth IRAs can be incredible investment vehicles as dollars invested today - especially during a bear market - will have incredible value down the line.
On top of this, Roth IRAs can be drawn upon as young as 59 ½, allowing you flexibility during your retirement years.
High Yield Savings Account
While not the highest value add to your investing strategy, these accounts are good investments in short term risk management. By offering a higher than average APY, these savings accounts are a perfect place to manage a 6-month emergency fund.
Another benefit of these accounts is that as the FED continues to raise interest rates - as we’re seeing currently - these accounts will also raise their APY to be more attractive investment vehicles for your assets.
Stocks
Continuing to invest, being diverse and avoiding trying to “time the market” are all favors you can do yourself when optimizing your stock investment strategy for 2023.
Continuing to invest will offer returns during a bull market. Being diverse in the stocks that you choose will help minimize risk. Lastly, avoiding the “timing the market” concept will allow you to invest today, which in the long run will offer more value.
Dollar-cost Averaging
The concept of dollar-cost averaging is a simple idea. If you make scheduled and consistent investments, you will be buying when a stock is both high and low. What this will do is average out your investments and offer more consistent returns in the long run.
This strategy can be especially valuable during a bear market, as regular investments during these market downturns can pay dividends during an eventual bull market.
Final Thoughts
2022 has been a year of ups and downs, which may have negatively impacted the outlook you have on your financial future. There are ways to steel yourself against this mindset though.
The biggest is preparation and optimization of your investment strategy. By doing so, you know that you’ve done everything you can to set yourself up for success. More importantly, if done correctly, you will see better results in the long run.
At NJM Wealth Preservation Strategies, we believe strongly in this concept. As our name suggests, we want to preserve your hardwork in the form of a strong & actively managed financial portfolio that you and your loved ones can rely on in your later years. The time to start this optimization? Today.
If you’re ready to learn more about optimizing your investments for 2023 and beyond, reach out today and let our team show you what your portfolio is capable of.