Make an Investment Strategy Based on Your Needs – Not Market Conditions

Market downturns are normal and expected, so don’t let them deter you when creating your investment strategy. However, depending on who you ask, seasoned investors will have different opinions whether you should continue investing when the market takes a dip.

One school of thought advises against “throwing good money after bad.” Usually offered as a warning, this saying cautions against spending extra money to address an unfixable problem or recoup frustrating losses. In the down market scenario, this means doubling-down on riskier investments to try making up for temporary losses in others. To play it safe, it’s best to slow investment activity and ride out the drop.

Some investors follow the idea of “buy low, sell high.” When the market falls, your portfolio and stock prices may drop. For some, this looks like an outstanding opportunity to snag some shares at bargain prices. That’s certainly possible, but there’s always the chance that a plummeting stock may be falling for a reason. If a single stock is dropping but the wider market remains steady, it may be best to avoid that stock. While it’s possible to profit when investing during a down market, this strategy requires research and caution. As a general rule, it’s typically safer to invest when the market as a whole is down instead of trying to buy individual stocks that are bottoming out.

Down markets offer a unique blend of risk and reward, but regardless of the state of the market, it’s important to do what’s best for your personal situation. Creating a sound, long-term investment strategy involves a few basic steps: setting your goals, minimizing costs, establishing risk tolerance, diversifying investments, and invest consistently.

Pinnacle Wealth Management makes investing in your future even easier. Whether you’re a seasoned investor looking to diversify your portfolio or an investment rookie who’s ready to invest for the first time, we can help! Read more about Pinnacle Wealth Management services on page 6.

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