The Upsides of a Down Market

September 4, 2019
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We’ve seen some market volatility lately with the China trade war, Fed rate drops and other key economic factors. How you deal with certain negative market activity will say a lot about you as an investor.

Of course, investing will always bring with it some level of risk and long-term success will always have its ups and downs. When there are downs, you have to look for the silver lining. There are actually some upsides to be found in a down market if you know where to look and maintain a proper perspective. Here are some positives to keep in mind as you continue to grow and refine your investment portfolio.

1. Understanding How the Stock Market Corrects Itself

The stock market regularly goes through periods of “correction,” with increases and decreases that help create a more stable economy over time. They sometimes happen suddenly and sharply, which may hurt short-term investors who aren’t prepared for a major downward correction. Successful long-term investors who know what they are doing can withstand a hit and take advantage when things start moving back upward.

2. Learning About Risk Management

At Illumination Wealth, we deal with investors of all ages. We are finding the younger investors to display more panic with some recent market volatility. That’s because they haven’t seen it before. Back in 2008-2009, we obviously hit the low point of a huge recession. If you weren’t an investor prior to that time, then you really don’t know what it’s like to see your stocks rapidly drop in value. Depending on how you choose to look at it, it’s a good lesson in risk management. You can’t always be overconfident and you have to be prepared for the natural ebbs and flows of the market.

3. Opportunities to Buy Stocks at Lower Prices

Devalued stocks give you a clear opportunity to buy while they are at low prices. Strong stocks and bonds will recover with time, so a down market can allow you to take advantage. You just have to be ready for future potential drops and know when it’s time to sell. Having an experienced investment manager and financial advisor on your site will be crucial to buying and selling stocks at the best possible times.

4. Finding Financial Balance

We’ve talked a lot about financial balance on the Illumination Wealth Blog lately. A down market can help you find a better balance when it comes to where you put all your money. Spreading it between different types of investments, retirement savings plans and also cash savings is important to learn on your journey toward financial independence. They say to never put all your eggs in one basket, and a down market is a perfect example of when this old saying is perfectly appropriate.

Though the major drops hurt almost all of us in some way or another, certain things we’ve seen in the market lately should help all current investors be smarter moving forward. Like the market itself, sometimes you need a sudden jolt to the system to correct your path and take a more strategic approach.

The financial advisement team of Illumination Wealth is here to help guide you in today’s turbulent market and beyond as you save for your future and manage your wealth wisely. We’ve experienced the ups and downs the market can bring and we are always working to serve our clients’ best interests. We can provide the guidance, support and expertise you need to establish and continually refine your investment plan no matter what the market brings.

Contact Illumination Wealth today and learn more about what we can do for you and your investment strategy.