Can some elements of a war strategy be incorporated in a financial plan to meet life's financial goals? The answer is a yes. Here are some military strategies which could be used to put in place a long term investment strategy.
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Volatility is not always a risk
Investors fear uncertainty. So quite naturally they get jittery whenever there is volatility in the prices of assets they are invested in. However, veteran investment professionals say that volatility is not always a risk and often, with some patience, an investor could turn volatility into opportunity. So cashing out during a volatile market may not be the best strategy but one could judge to ride it with patience.
HERE ARE A FEW STEPS TO TACKLE VOLATILITY EFFICIENTLY
HAVE PATIENCE AND CONTROL YOUR NERVES: Markets do not move in a secular path. So there would be phases of upswings, downswings and flat movement of prices of assets. In times of downswing, just hold back and wait for the phase to pass.
SHOULD YOU REBALANCE?: You should not review and rebalance your portfolio just because there is volatility in an asset class. When you are due for a review of your portfolio and if rebalancing is required should be pre-set when you start your financial planning.
TAKE STOCK OF YOUR WHOLE PORTFOLIO: During volatile phases, which could be in stocks, Debt, gold or real estate, don't take stock of the swings only in that particular asset. Look at the whole portfolio and then decide on the future course of action.
DON'T LOSE VISION OF YOUR LONG TERM GoalS: Your long term Goals are probably several years ahead. So volatility for a few months should not prompt you to deter you to abandon your long term Goals.
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