Today’s financial news headlines can make your head spin. Britain votes to leave the European Union in an historic decision. The British pound plummets. Global stocks plunge.
Pretty nerve wracking headlines — so what to do as an investor? While they don’t happen often, we have historically experienced events like these that rattle markets around the world. And this one won’t be the last.
Events like Brexit — and there will be others — are out of our control. Yet they impact our investments and thus can affect whether we are on track to reach our financial goals. It can drive us nuts not having control and sometimes, you feel like you should just do something, anything, to regain the sense that you’re in control. But in investing, not taking action in the heat of the moment can be the smartest thing you can do for your investments.
Keep Calm and Invest On
Of course, there are investing decisions — important ones — that we can make to help us weather unexpected events like Brexit and help keep us on track for our goals.
1. Make sure your portfolio is well-diversified.
Events like yesterday’s vote are exactly the reason why. We diversify because we can’t predict the future of financial markets with any certainty. Even the experts called the vote wrong this time. That’s why we diversify — to offer protection against the unpredictable. When your portfolio is diversified, some investments will be up and others will be down. For example, today, global stocks are down, but asset classes like US bonds are up. At Ellevest, all of our portfolios are diversified across many different asset classes to help reduce overall risk and offer protection against what we don’t know and can’t foresee.
2. Invest over time.
Believe me, if we could time the market by selling at peaks and buying at bottoms, we should all do exactly that. But no-one can predict the markets, and keeping our money in cash because we fear we’ll buy at the wrong time won’t help us reach our financial goals. Investing over time — today, next month, the month after — means that sometimes you will buy when prices are low and sometimes when prices are high, and you should pay an average price over time. You won’t need to worry about buying ‘at the right time.’ Investing with Ellevest can help you do exactly that.
A final thought: we at Ellevest have been through a lot of these markets. That experience is why we’ve built layers of conservatism into our investment portfolios, our recommendations, and our forecasts, with a goal of helping you weather unexpected events like Brexit. And our investment portfolios are constructed to maximize the chances of reaching your goals, not to maximize returns by taking on more risk. So while we certainly didn’t forecast a Brexit, the impact of global events like this are built into our forecasts.
You can read more about how we invest at Ellevest here.
The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.
Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.