Name: Advice for investors from top financial advisors
Uploaded: 2022-11-28
Duration: 4 min 24 s
Description: Three advisors weigh in on the biggest risks and opportunities facing investors in 2023.

Three advisors weigh in on the biggest risks and opportunities facing investors in 2023.

Advice for investors from top financial advisors

Finance

I think of this market as being winter, we can't have harvested summer forever. Eventually we need to have winter and eventually we'll have early spring again, inflation has weird, its ugly head. Interest rates have skyrocketed and stocks have fallen both in terms of valuation and market cap. So I think that we're at a point where it's getting more complicated to generate returns from stocks. I think the big risk for investors now and as always is their own behavior. We obviously have no control over what may happen. The only thing that we can control is our own reaction to those events and headlines. I think in times like this, individual investors will decide they know what they need to do to take control in this market. So they'll sell in a down market or they'll decide to reallocate in a down market and that is not a good idea if you realize that your allocation is too aggressive, This is not the time to reallocate, Hold on, stop looking. And when the markets come back, that is a great time to reallocate, but don't don't secure your losses in a down market by selling the risk to stocks is that we go into recession because in recession, companies will historically earn less money and you know historically it will be hard for them to find ways to grow. And so that will reflect in the prices that people are willing to pay for stocks and of course there will be blowups, there will be bankruptcies, there will be failures. So we do see some selling pressure for the S. And P. 500 as investors move out of U. S. Large cap stocks out of mega cap tech into other areas of the market, like small caps, like other regions of the world. I think there's a huge opportunity that's been created in the market this year stocks are selling at 25% lower valuations than they were a year ago and on the fixed income side now you can buy a portfolio of risk free bonds for 4% which is something that you could only have dreamed of a year ago, two years ago, you can buy tax free municipal bonds at a tax equivalent yield of 6.5 to 7%. This is they dream scenario for investors. If you had offered them that two years ago they would have been over the moon. So now that dream is a reality, we've also been taking people up for big Roth conversion because if markets are down 20% your portfolio is down 20% that means it costs you 20% less to do that Roth conversion and that's teeing you up for long term tax exempt growth for your retirement. And let me tell you a financial planner loves nothing more than a Roth ira Equities participate in inflation earnings grow with inflation. So there are lots of spots in the equity market to benefit from this inflationary cycle. I think that where you get your real bang for your buck from equities as income, and, you know, a third of the market's returns over the last, you know, 100 years have come from dividends, that hasn't necessarily been the case in the last 10 years, but dividends are a really important part of the investment spectrum. Our advice to investors is focus on the cash that you're getting out of companies rather than companies that are promising great growth over the long term. The most important thing that investors can do is to stay focused on why they're investing in the first place. I think it's important to acknowledge that anxiety is not a great place to make financial decisions from. I don't think this is the time for action. I think this is a time for reflection and then pausing. I think this moment is analogous with Greece. This has been very hard, from a, from the Black Lives Matter movement to covid to political upheaval. It is important for us to acknowledge that we have lost and that we can pause and not do anything, and that might actually be the best thing for this moment, because we'll be clearer moving forward about how we want to utilize our wealth for the benefit of our families and our community at large